Results of the Study: Organizing the Company for Projects

The findings of the research project revealed that there is a need to divide the management of a project company into three different levels: business development, business management, and project management levels (Figure 4). The two upper levels include company level project management, and the lowest level of project management includes all activities that concern the management of individual projects. The empirical case studies indicated that business development level is usually relatively well organized in project companies. Also, at the lowest management level, the management of individual projects is taken good care of. However, the business management level in the middle often lacks systematic and well-organized management schemes.

Figure 4: Levels of Company Management

The business development level at the top of the management pyramid (Figure 4) contains strategy development and strategic management of the company. For example, decisions concerning product strategy and market areas are made at that level. Also, decisions on where the company wants to be in the future and how the goal can be achieved are carried out at this management level. The top management defines the strategy and the vision of the company and communicates it down to lower levels.

The project management level at the bottom of the pyramid (Figure 4) must be emphasized as an important part of the management system. At the project level, important decisions and activities occur that finally ensure the achievement of business objectives. The project personnel have to cope with changes, problems, and even faults no matter how well the project is prepared and how much support and instructions the company level management has offered. The point is that the projects are in all circumstances so challenging that the company management has to use every opportunity to lessen this challenge by their activities.

The business management level in the middle of the pyramid (Figure 4) integrates projects and their management to the overall business context and to the business purpose by simultaneously instructing the way the projects are managed. The business management level serves as a link between the strategic business development and operative project management levels. This level includes project portfolio management content, which emphasizes management of the multiproject environment with strategic alignment of projects to business objectives, and on management of complex interactions between projects and between subsets of the whole corporate-level portfolio. Furthermore, the purpose of this middle level management is to organize the reporting and follow-up systems to ensure that relevant information, such as changes in markets, technologies, or customer environment, are reported to upper level. The business management level includes also the responsibility for arranging standard product structures and standard operating procedures for the company, defining clear sales policies, and ensuring that instructions are in place and that they are followed.

There are two major requirement categories posed to the business management level. The first set of requirements concerns the definition of operating policies, instructions, and structures for engineers, managers, and sales people. The operating policies define how projects are carried out in the different phases. Fulfilling these requirements forms the basis for the company to work effectively. The second set of requirements concerns supervising the projects into the right direction and following developments of the projects. This contains tasks such as making go/no-go decisions in the sales and marketing phase, evaluating risk, allocating resources to projects, and reviewing and reprioritizing objectives of the projects if necessary. In practice this means regularly organized meetings and follow-up mechanisms, which also facilitate informal information distribution. The main objectives of the business management level include processes and practices development and implementation, project portfolio management including market analysis, organizational learning and information sharing arrangements, and continuous customer care.

Furthermore, the business management level in the middle should help sales and marketing, planning, and project management to work efficiently, to ensure that learning occurs and that experiences are disseminated in the organization. Artto (1999) introduces the learning, innovation, and creativity loop in the management of a project company. The loop emphasizes the crucial importance of the ability to foster self-regulating and innovative aspects of the project company's activities. Instead of depending on rigid management methods, the company must employ knowledge intensive and flexible business practices that ensure adaptation to new situations. There must be sufficient room for innovative and creative solutions. The learning loop should encourage exploitation of experiences and business practices that facilitate learning in the organization. To fulfill these requirements the middle level should introduce tools, training, and reporting systems, develop competencies of the employees, take care of the long-term customer relations, and arrange structures and models for product and project processes.

Organizing for networking is essential at the business management level. Projects are in a pivotal position in customer relations and management of customer-related information. For a project supplier, cooperation and networking are natural parts of activities. Project suppliers facilitate concentration on core activities and development of their expertise and knowledge concerning also their customers' businesses. Thus, the learning, innovation, and creativity loop in project-supplier organizations should be understood as a wide enough concept. The loop in question must cover sales and marketing, execution, and after-sales stages. In all of these stages experiences are gained and applied, learning occurs accordingly, and new innovations and creative solutions are put in use. From the perspective of the business as a whole, of key importance are contacts with customers, understanding and support of the customers' businesses, as well as receiving customers' feedback in order to develop the project company's own operations. The business interactions of multiple projects across different corporations combine the individual projects to entities of whole networks of interacting projects and corporations. In the future, companies start measuring their success and business potential even more as a share of the overall success in entire project networks by measuring their customers, suppliers, and competitors (Artto et al. 2001). Priorities in project networks may be negotiated in the form of project delivery chains, as a content of business transactions. Project delivery chains are composed of external projects, the final customer's internal project being the ultimate downstream end point of the delivery chain, and the contractor as producer. They are manufacturing-oriented vehicles initiated for delivering the end product that fulfils the final customer's business need (Ollus et al. 1998a, 1998b; Poskela 2001; Siniharju 2000; Suominen 2001; Uzzi 1997).

The business management level must cover managerial issues organized for all phases across the extended project process. In the case of external delivery-centered projects, strategic project management, and the most important project portfolio management, decisions take place at least in pre-project (sales) and post-project (after sales) phases. In these stages it is possible to make real fundamental strategic decisions (e.g., no-go decisions) that concern even the justification of the existence of the whole project and the existence of the business relationship with the customer. The actual project phase (or project execution phase) is often regulated by a binding delivery contract between the supplier and the customer, which implies that the actual project execution occurs in the manufacturing mode without possibilities for the supplier to set any new fundamental directions at the strategic level. The go and no-go decisions, with a wide business perspective, are typically made in the pre-project and post-project phases of the extended project process. This emphasizes not only the strategic business importance of project sales and marketing, but also the importance of the after-sales activities with continuous customer care. Concerning the future development efforts in the project portfolio management field, Artto et al. (2001) raised not only the importance of defining portfolios and their boundaries with appropriate responsibilities in organizations, but also the importance of managing the interaction across boundaries between the portfolio and its projects, between single projects, between different portfolios, and between different corporations in business networks.