Relationship between programmes, projects and strategic change
Implementing strategy is the hardest part of the strategy process, and it is delivered through the execution of strategic projects and programmes and the realisation of their targeted benefits.
Strategic change is an essential part of making the strategic investment work.
The project focus is on the creation of value enabling the execution of deliberate and emergent strategies. The scope of projects and programmes must incorporate benefit realization justifying the investment and result in a viable and achievable business case.
Harnessing Programmes
Programmes are unique and transient strategic endeavours, undertaken to achieve beneficial change and incorporating a group of related and business-as-usual (steady-state) activities.
Programmes are defined as coordinated projects and change management activities combined to achieve beneficial change.
The distinction between projects and programmes depends on the context and the guiding criteria between them often relate to the complexity of scope and the addition of change activities.
The need for significant improvement will align with the organisation’s strategy, and programmes will help to deliver elements of that strategy.
Projects, programmes and portfolios tend to flow out of strategic decisions made by the organisation and can therefore be viewed as strategic investments that enable other activities and capabilities to be developed.
The diagram above shows the organisation has set its strategic objectives for change and responding to the environment, which could involve a number of structural choices from portfolios to programmes to projects.
Portfolio management is mainly focused on the selection and prioritisation of projects and programmes within the capacity to deliver.
Programme management then focuses on the coordination of projects and business-as-usual with particular emphasis on the achievement of beneficial change.
Projects, programmes and portfolios situated to deliver strategic change
Ultimately it is project-work that delivers products or services which enable benefits to be realised and intended value accrued.
Such projects could be part of a programme or directly part of a portfolio.
Projects could also be delivered as single entities since there is no advantage in them being part of a programme or portfolio, yet they are still able to deliver strategic objectives.
Senior organisation leaders must be able to demonstrate how each project or programme that they fund contributes to the overall strategy.
All projects or programmes must be justified or aligned with the organisational strategy.
Of course, supplier organisations managing projects for their clients on a commercial basis may have a different strategic justification for conducting commercial work.
Project work may also be needed as an enabler to maintain existing capabilities or assets, ensure compliance with newly introduced legislation or satisfy other professional requirements or business imperatives.
Situations where the use of programme management may be appropriate
Programmes typically combine new deployment with some elements of business-as-usual.
They utilise capital expenditure to acquire assets, services, products and capability, alongside operating expense incurred as a result of performing normal business operations.
Programmes are often defined as delivering change, and would typically incorporate the full realization of expected benefits to satisfy the business case, which involves the use of capabilities or facilities created by the programme in an ongoing, business-as-usual manner.
Appropriate use of programme management
If the organization wishes to achieve the following:
More effective delivery of change – project interdependencies are optimized allowing them to have the greatest chance of delivering their benefits without adverse effect on business-as-usual.
It is likely that projects within the programme will have a complex set of dependencies and outputs, which would be more difficult to deliver as individual projects.
Increased responsiveness to strategic initiatives – filling the gaps between strategies, business cases, and projects. The programme level view will look for synergies between individual project business cases to yield a greater return from the projects as a programme rather than if each project had delivered independently.
More effective management of resources – through prioritization and project integration allowing for resource conflicts, within individual projects.
To be managed at a programme level ensuring that those projects have the highest priority on resources to maximize benefits realization within business-as-usual.
Better management of risk in a wider business context – contingencies that are applied to projects on an individual basis may lack economies of scale.
If these risk contingencies are applied at a programme level, the overall contingency amount may be reduced as common responses made at this level may influence several projects simultaneously.
This will typically benefit the organizations where there were a number of higher risk projects being delivered.
More efficient coordination and control – by defining roles and responsibilities for managing the programme and a process to initiate, accelerate/de-accelerate, and terminate projects within the programme.
Bringing together common processes for delivering scope will result in a greater likelihood of those projects being more fully utilized by the organization, once they are delivered.
Increased focus on obtaining strategic benefits – by aligning with the strategic goals and needs of the organization, project products and services can be fed into business-as-usual to achieve benefit synergies not available for a single project.
Situations where the use of portfolio management may be appropriate
Portfolio management is used to select, prioritize and control an organization’s programmes and projects, in line with its strategic objectives and capacity to deliver.
Their goal is to balance the implementation of change initiatives and the maintenance of business-as-usual while optimising return on investment.
Portfolios are used to structure investment decisions.
They can be managed at an organisational or functional level to optimise strategic benefits or operational efficiency and address a number of major questions:
What are the projects and programmes needed to deliver the strategic objectives, taking account of risk, resource constraints and affordability?
Is the organisation capable of delivering them effectively and efficiently?
Are the full potential benefits from the organisation’s investment capable of being realised?
For organisations implementing portfolio management, the following situations would be where the use of such a process would be most appropriate:
Where there is a need for the organisation’s projects and programmes to be more aligned with its key business objectives, including those of profitability, customer service, reputation, sustainability and growth.
When the organisation’s financial controls, financial planning and expenditure review processes need to be applied to both individual projects and the portfolio as a whole.
When assurance is required of how the mix of projects continues to support strategy and take account of changes to external factors.
Where the need exists for the organisation to effectively discriminate correctly between activities that should be managed as projects and other activities that should be managed as non-project operations.
A need for assessment and addressing of risks associated with the project portfolio, including the risk of corporate failure needs to be highlighted and monitored.
Provide verification that projects and programmes are consistent with the organisation’s existing capacity and capability.
To allow the organisation’s engagement with project suppliers to encourage a more sustainable portfolio by ensuring their early involvement and by a shared understanding of the risks and potential rewards.
Provide more evidence that the organisation’s engagement with its customers and engagement with the sources of finance for its projects encourages a sustainable portfolio.
Assurance that the impact of implementing a project portfolio is acceptable to its ongoing operations.
Applying portfolio management allows organisations to:
Drive priorities for change by adopting a high level ‘whole picture’ view of their business and how it must react to change
Make the best decisions using information that is clear and representative of the true potential effect of key business drivers
Use the most appropriate resources to achieve the best results with the least amount of wasted effort.
Corporate leaders are accountable for demonstrating profitability and return on investment, and therefore view project work as a critical part of delivering that investment and contributing to the overall benefit of the organisation.
Portfolios play an important part in maintaining the alignment between project work and strategic objectives and in enabling the realisation of the benefits that underpin the successful capture of the intended value and securing the return on investment.
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