CHAPTER 5

Theoretical Implications and Conclusions

This multi-method study investigated the determinants for program and portfolio management practices in organizations, and the associated roles and responsibilities of middle managers. It took a TCE perspective, and used a qualitative study with nine interviews and a Web-based survey with 242 responses to develop a framework of program and portfolio manager-related roles of middle managers, and how they are determined by an organization’s situation, given its degree of environmental turbulence and project types. The framework is shown in Table 3.

The research questions can now be answered.

Research question Q1 asked:

How do project type and organizational complexity determine the use of project portfolio and program management in organizations?

This was tested through research hypotheses H1 and H2, which showed that program and portfolio management practices are determined by the complexity of the environment.

Higher complexity, expressed as the number of factors taken into account during decision-making, leads to the use of specific program and portfolio management practices (i.e., processes and tools), such as:

• Selection of projects based on the organization’s strategy
• Prioritization of projects, and communication of the priorities
• Portfolio management tools to collect and disseminate information about the status of all high priority projects
• Reporting to steering groups using similar templates and metrics
• Decision-making in the best interest of the organization.

Higher environmental complexity appeared to be associated with clear roles for:

• Identification of business opportunities and business planning
• Project reviews
• Handling of issues
• Coaching of project managers
• General process improvement.

Roles appeared to also be dependent on project type. Organizations running projects with a high degree of organizational change content show more roles for:

• Resource planning
• Steering groups
• Prioritization of projects
• Handling of issues.

Long-term projects appeared to be associated with:

• More business planning
• Project plan reviews
• Bad project identification.

Formal responsibilities, like those for plan achievement or human resources management, were not related to environment or project type.

Research question Q2 asked:

What are middle managers’ practices, roles and responsibilities in program and portfolio management in successful organizations?

High performing organizations were found to apply project and portfolio management practices, as well as bad project identification, significantly more than low performing organizations.

Project managers’ reporting relationships differ also with organizational performance. In low performing organizations, project managers report to middle managers with program and portfolio management tasks, whereas in high performing organizations, they report elsewhere.

A summary table showing research questions, hypotheses, and results can be found in Appendix C.

The final model for environmental and project type impact on program and portfolio management practices, roles, and responsibilities is shown in Figure 10. It outlines the individual relationships between environmental complexity and project type variables with different program and portfolio management roles, responsibilities, and practice variables.

Modeling the relationship between roles and environmental variables showed that, across all organizations, requirements stemming from the environment (i.e., complexity and project type) are balanced through all six roles identified for middle managers. Low performing organizations, however, lack appropriate balance for the requirements stemming from complex environments, project durations, and product outcomes through adequate roles in the organization.

Theoretical Implications

The results show a contingency between organizations’ environment and their governance style. Especially complex environments, where “soft” projects are delivered to external customers, benefit from adopting portfolio management practices.

TCE’s underlying assumption that different transaction types need different governance structures (Williamson, 1985) is supported by the research results. High performing organizations show more flexibility in adapting their governance to the requirements of their environment. They counteract the problem of bounded rationality in decision-making through specific processes and tools, as well as through focus on issues handling and business planning.

Program and portfolio management are seen as distinctive approaches to management, which primarily coexist in organizations due to the effect of these approaches on balancing different perspectives toward managing project-based organizations. A project can be simultaneously managed as part of program or portfolio (Archibald, 2003). So, its management is not exclusively a domain of the project manager. Aspects of goal or economic optimization from a wider organizational viewpoint are likely to influence the planning and execution of projects. That identifies the different perspectives of project, program, and portfolio managers towards project-oriented work in organizations (Turner & Müller, 2003); see Table 14. Project managers use their project to bring about change in an organization or develop a new product. A project approach is used to manage the inherent uncertainty. Program managers, on the other hand, perceive projects as temporary organizations and as a means to produce the outcome of their program for the accomplishment of higher-level goals. Finally, portfolio managers perceive projects as an agency to utilize an organization’s resource in an efficient way.

Table 14          Perspectives of Project, Program, and Portfolio Managers

Looking at the combined roles of project managers, program managers, and portfolio managers described in the literature, as well as the interview results, it shows that:

• Project managers focus on the quality aspects of each stage, such as the quality in planning, development of products, and capture of knowledge.
• Program managers are more concerned with the individual project’s fit in the overall program along the timeline, and the overall fit with the permanent organization’s strategic objectives.
• Portfolio managers are mostly concerned with the economic assignment of resources across various projects.

This reflects the well-known objectives of quality, time, and costs (focused on by project manager, program manager, and portfolio manager, respectively) at the level of the permanent organization, thus indicating the projectization of organizational structures. The alignment of roles within the organization can, therefore, be described as the project manager serving as the representative of the project, and the portfolio manager as the representative of the permanent organization, with the program manager bridging the two organizations through the sum of projects going on in a program in order to achieve the organization’s objectives. This is summarized in Table 15.

The findings resemble the “broker and steward” model, which was empirically developed by Turner and Keegan (2001). Their investigation into governance mechanisms in project-oriented firms identified two distinct roles, independent of the mix of large and small customers or projects in a firm. The first role is described as an extroverted, entrepreneurial broker, who builds and maintains the relationship of a supplier organization with a client. The program management role in the present study resembles much of the broker’s role. The steward’s role is to put together the network of resources to deliver the project. Similar to the description of the portfolio management role, stewards ensure the availability of the right person at the right place and time, taking into account the long-term objectives of the supplier and the interaction with neighboring projects and their resource needs. The project manager then manages the process to deliver the project. Figure 11 shows this as a four-step engagement process for program and portfolio managers in external projects:

• Step 1: Program manager (as part of a sales team) identifies the business opportunity
• Step 2: Program manager engages the portfolio manager to decide on acceptance of the project and possible resource availability
• Step 3: Portfolio manager appoints the project manager, supported by information from the program manager
• Step 4: Project manager delivers the project to the client.

But why are there two distinct roles for broker and steward? In an attempt to answer this question, Turner and Keegan (2001) argue that the broker has to adapt to the external culture of the customer, whereas the steward adapts to the internal culture of the resource pool. That is equally important for the program and portfolio manager role, and adds to the justification for having these as two distinct roles.

The study showed that middle managers perform a variety of program and portfolio management-related tasks. In smaller organizations, in particular, these managers often have additional responsibilities that include department or product management. Several of the interviewees held staff positions without direct reports. These cases highlight the integrative task of middle managers, namely, the linking of different organizational entities into a cohesive whole. The nature of a program or portfolio as a cross-organizational grouping of projects puts these managers at the interface of otherwise separated organizational entities, such as those responsible for products, industries, or geographies (see Figure 12). Through this, the manager’s role becomes one of organizational integrator: a coordinator of resources, consultant to management teams in various organizations, and potential escalator of issues across organizational boundaries.

Middle managers are pivotal in establishing these cross-organizational links by enabling the potential for generating and linking synergies in wide and diversified organizations.

Suggestions for Further Research

The strength of the present study is in its multi-method approach, whose results matched those of existing studies and provided further insights into appropriate governance styles in different situations. The results, however, are on a global basis, and should be further assessed on a geographical and industrial level to develop clearer recommendations for organizations on how to best organize for the benefit of their results. Portfolio management’s intertwined relationship with traditional line management roles, as seen through this study, opens the question of whether portfolio management could, in fact, be studied in isolation or only in combination with other line management tasks. Setting portfolio management tasks in relation to other managerial tasks would allow one to better understand these managers’ rationale for decision–making, and provide one or more integrative pictures of the various tasks of middle managers.

A Final Word

This report started with a statement about two recent trends:

• The increased use of projects as a way to do business in organizations
• The diminishing number of middle managers in organizations, which is contrary to the pivotal position they hold at the crossroads of strategic thinking and operational implementation.

The present study outlined the practices, roles, and responsibilities utilized by middle managers in successful organizations for coping with this situation. In outlining critical focus areas, the study highlighted middle managers’ demonstrated flexibility in adapting their roles to their situation as a key factor for organizational success.