Lesson 2: Aligning Project Plans with Corporate Strategy

Introduction

Corporate strategy is a statement that delineates the organization's overall goals and objectives and the action plans to pursue and achieve those objectives. The implementation of a corporate strategy is accomplished through projects. Hence, it is imperative that all project plans formulated to meet project goals are well-aligned with an organization's corporate strategy. In a project environment all project planning is part of the larger umbrella process called project strategy. Therefore, linking project strategy to corporate strategy ensures that project plans are not in conflict with corporate goals and objectives.

Objectives

By the end of this lesson, you should be able to:

• Outline the relationship between corporate and project strategies.
• Explain the importance of linking project strategy and project plans with corporate strategy.
• Describe the process of creating a project strategy from corporate strategy.

2.1 Relationship between Corporate and Project Strategies

Corporate strategy is a framework for articulating an organization's overall goals and objectives and the means that will be pursued to accomplish them. Project strategy, on the other hand, delineates the various external and internal factors that will affect project success and the processes and approaches that will be adopted to attain project objectives. From an organizational point of view, projects invariably evolve out of corporate strategies. The corporate strategy is typically cascaded through several strategic business units and is ultimately translated into a collection of portfolios of programs or projects. Given available resources, these projects then are the mechanisms through which the corporate initiatives are implemented (Jamieson and Morris, 2004, p. 177).

Corporate strategy implementation is frequently accomplished through several mission-critical projects. This implies focusing attention on several key areas. First, activities that need to be completed require allocating organizational resources which are often scarce with conflicting demands placed on them. Second, effective implementation of the corporate strategy through projects depends on the organizational structure and culture. Third, an effective project planning and control system must be in place to ensure activities are performed as planned. Fourth, motivating project participants is another vital area to ensure corporate strategy implementation success. Finally, prioritizing projects is required to determine the critical projects that need to be completed to accomplish corporate objectives. All of the five key areas listed above fall under the purview of project strategy. The value of a project within an organization must be understood in terms of its contribution to the strategic goals that have been set by the top management of that organization. If the project does not provide value, then it does not contribute towards achieving the strategic goals and it is unlikely that the project will survive. The link, therefore, between corporate strategy and project strategy is fundamental to achieving the overall corporate goals and objectives.

2.2 Importance of Linking Corporate and Project Strategies

"Many of the key components of the strategic planning process, such as internal analysis, organizational structures, and control systems have strong links to project management processes and activities, and thereby strongly influence intended corporate and business strategies" (Jamieson and Morris, 2004, p. 177).

"The larger or more significant the project, the more important it is that the link to corporate strategy be established. No one in her right mind will commit significant corporate resources and funds to a project that does little or nothing to further corporate objectives" (Hartman, 2000, p. 37).

The elements of strategy that are addressed by the initiation of a project, or a number of projects, are often of great importance to achieving the strategic goals. The type of projects that are used at the cutting edge of strategic implementation include business process re-engineering or process improvement, marketing activities oriented towards specific objectives, business-wide (and increasingly supply chain-wide) information technology introduction, mergers, and so on. There are also many smaller projects that exist within organizations that are also supporting the strategic change initiated by the larger projects. These types of projects might be minor office refurbishments, small scale office reorganizations, or changes in operating procedures. What is important to recognize is that the success of all these projects collectively is fundamental to achieving the strategic objectives of the organization. Examples of corporate (or business) strategic goals which may shape project strategy are:

• Maintenance of a set share of the market
• Increased growth or profits
• Social or environmental responsibility
• Improved efficiency
• Diversification or concentration

See the figure below for a schematic representation of the linkage between corporate and project strategy.

Figure 2.1 Linking Corporate and Project Strategy
Copyright ©1999 R. J. Turner. Handbook of Project-Based Management. 2nd ed. Berkshire, England: McGraw-Hill UK. This material is used with permission from McGraw Hill UK.

Project strategy is influenced by a number of factors. The project inputs will come from the external environment in which the project "lives" and will determine to a large extent the design of the internal project processes needed to achieve the project deliverables. The external environmental factors that will influence the project are more likely identical to the strategic factors that led to the project being initiated. These external factors must be reexamined at the early stages of the project front-end definition work when the project specific strategy is being formulated to see if conditions in the external environment have changed. Because there are many types of project there is no single best strategy that is suitable for all projects. The project strategy adopted is dependent on the type of project, its objectives, the constraints that apply and the opportunities that exist for its execution. The project strategy should be encapsulated in a Project Strategy Plan (also often called the Project Execution Plan). This formalizes the strategic decision making process and allows the project strategy to be communicated to the project team and appropriate stakeholders. However, this communication is a two-way process and those receiving the plan should be given the opportunity to question the contents of the plan, and then be asked to "buy into" the strategy proposed.

2.3 Creating Project Strategy from Corporate Strategy

Transitioning from corporate to project strategy most effectively requires that a set of coherent project management processes are in place in order to achieve their seamless integration with the strategic management processes. A schematic representation of the transition from a business or corporate strategy to a project strategy is shown in Figure 2.2 below. As this figure shows, the transition from corporate to project strategy has two stages and each includes a number of critical project management activities or processes. The two stages and their various elements are (Jamieson and Morris, 2004):

Stage 1: Translating Business Strategies

1. Project definition
2. Project Scope management
3. Requirements management
4. Strategic framework

Stage 2: Creating Project Strategy

1. Project management planning and integration process
2. Project plans development process
3. Generic project management knowledge and competencies
4. Elements of project strategy

Figure 2.2 Transitioning from Corporate Strategy to Project Strategy
Project Management Institute, Translating Corporate Strategy into Project Strategy , Project Management Institute, Inc., 2004. Copyright and all rights reserved. Material from this publication has been reproduced with the permission of PMI.

2.4 Translating Business Strategies

Project Definition

Defining the project is the first critical step in the process of creating a project strategy from corporate strategy. According to Turner (1999, p. 82), project definition is achieved by:

• setting the project objectives, scope definition through a strategic or milestone plan,
• setting functional strategies for assessing technical risk, careful management of the design process, and
• managing resources.

As a consequence of the project definition process, we are able to create and define the project vision and its purpose. We also ensure that project plans are well-aligned with the corporate business plans and consensus for the basis of cooperation from among the project participants is achieved.

Scope Management

This process verifies that the project was initiated as a result of market demand or a business need and company's strategic plan is the input to this process. The output of this process is the project scope statement that contains elements such as the project justification, the product, deliverables, and project objectives. All of these are key elements of project strategy that are directly linked to overall corporate strategy.

Requirements Management

Through requirements management, the technical requirements of the project specified by the customer are explicitly defined, providing the platform for building the system requirements for the project. This is yet another critical management process as the technical requirements of a project have a significant impact on project strategy.

2.5 Creating Project Strategy

The elements of project definition, project scope and project requirements from the previous stage are inputs to the project management planning and integration process and the project plan development process of the creating project strategy stage. The output of the project plan development process is the project strategy.

We have now reached the end of Lesson 2. By now, you should have a clearer understanding of the need to align corporate and project strategy. You should also have completed your reading assignment as specified on your syllabus. At this time, return to your syllabus and complete any activities for this lesson. Subsequent lessons of this course will address this topic of project planning in greater detail.

References

• Jamieson, A., and Morris, P. W. G. (2004). Moving from corporate strategy to project strategy. In The Wiley Guide for Managing Projects. Pinto, J. K., and Morris, P. W. G., Eds. Hoboken, NJ: John Wiley and Sons.
• Hartman, F. T. (2000). Don't Park Your Brain Outside: A Practical Guide to Improving Shareholder Value With Smart Management. Newtown Square, PA: Project Management Institute.
• Turner, R. J. (1999). The Handb ook of Project-Based Management. 2nd Ed. London: MacGraw Hill UK.