PRINCE2 Projects in Context
PRINCE2 assumes that there will be a customer who will specify the desired result and a supplier who will provide the resources and skills to deliver that result.
PRINCE2 refers to the organization that commissions a project as ‘corporate, programme management, or the customer’ (corporate or programme management).
Corporate or programme management is responsible for providing the Project Mandate, governing the project, and for realizing any benefits that the project might deliver or enable
PRINCE2 refers to a supplier as the person, group or groups responsible for the supply of the project’s specialist products.
Projects may be wholly managed within the commissioning organization, or be part of a commercial relationship
PRINCE2 2023 Projects can exist within many contexts as shown below:
Projects can exist as standalone entities within an organization and outside the governance structures introduced by programmes or portfolios, or where an organization has been set up solely for the purpose of undertaking the project.
A project may be part of a programme, and the programme manager may commission the project to enable or deliver products or outputs that contribute to some of the programs expected outcomes. The project will be impacted by the program’s approach to governance, its structure and its reporting requirements
PRINCE2 Programme definition
A temporary, flexible organization structure created to coordinate, direct and oversee the implementation of a set of related projects and activities in order to deliver outcomes and benefits related to the organization’s strategic objectives. A program is likely to have a lifespan of several years
PRINCE2 Project Commissioning
PRINCE2 defines the term ‘sponsor’ as the role that is the main driving force behind a programme or project.
The guidance uses the term ‘commission’ for the activity authority to request the project. The organisation commissioning the project will use the provides the project sponsor
PRINCE2 Projects within a portfolio
Corporate organizational structures can vary from ‘traditional’ functional structures, two project-focused corporate organizations.
In the ‘traditional’ functional structure, staff are organized by type of work, and there are clear reporting lines, whereas in contrast, the standard practice in project-focused corporate organizations is to work with project teams
Organizations may have corporate structures in which projects are commissioned to deliver products or outputs that contribute to the strategic objectives of the organization, and are managed within portfolios.
A portfolio may comprise programs, projects and other work that may not necessarily be interdependent or directly related, but must all contribute to achieving the strategic objectives
PRINCE2 Projects in a commercial environment
If the project is being run to deliver to a specific set of customer requirements, the customer may have entered into a commercial relationship with a supplier following a formal tender.
The organisation delivering the project (the supplier), will do so in order to satisfy a particular needs identified by the customer.
The contract between the parties sets out how the customer and supplier will work together to deliver the project, but the rights and duties covered by the agreement may constrain how a project manager manages the project.
The customer may break the work down into one or more elements. The number of elements is that which is necessary to deliver the customer’s business case. Some of those elements may then be used to procure suppliers to deliver that work, while others may form the basis of work to be delivered by the customer itself.
For a supplier, the work to be delivered may be the subject of a legally binding contract resulting from the procurement process, and in order to deliver this work, the supplier may itself procu the subcontractor’s by further breaking down its work into additional elements.
In a commercial environment, sometimes there may be hierarchies of commercial relationships between suppliers.
Rather than a simple customer/supplier relationship involving two organizations, projects often involve multiple organizations constrained by multiple contracts.
There may be a primary commissioning organization (or one prime contractor), but there may be several customers and/or several supplier organizations, each of which may have its own business case for undertaking the project.
Examples of primary commissioning organizations include:
- Joint ventures
- Collaborative research
- Inter-governmental projects
- Inter-agency projects (for example the United Nations development program
- Bidding consortium and alliance contracting
- Partnerships
When managing projects in a commercial environment, consider that there may be multiple sets of:
- Reasons for undertaking the project (business case)
- Management systems (including project management methods)
- Governments(possibly requiring disclosure of different sorts of project data at different points in the project life)
- Organisation structures
- Delivery approaches
- Corporate cultures, for example risk appetite
You will want to be careful of the varied uses of terminology as these can be particularly confusing where multiple best practice methods are employed within the same organization, and care must be taken to map or integrate the methods.
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