Prior Research

Previous work in this arena includes the work of Ibbs and Kwak (1997). This study developed and presented the 5-step Berkeley Project Management Process Maturity Model to better understand and locate an organization's current project management process level.

The Berkeley Model is an adaptation from Crosby (1979), the Software Engineering Institute (Paulk 1993), and McCauley (1993). The novel feature is that it incorporates a learning component (Level 5), which many companies profess to support but in reality do not.

The next step was to use this model to benchmark over thirty-eight companies in five different industries. The express purpose of this study was to test the research hypothesis:

H_o: Project management has value to companies that can be quantitatively demonstrated.

Figure 1: Berkeley Project Management Process Maturity Model

Though the research broke new ground, it did not prove this hypothesis in a traditional, academic sense. Namely, the Berkeley team found that:

• There was an association, but not a statistically significant relationship, between an organization's project management maturity and its ability to execute projects more effectively.

• There was an association, but not statistically significant relationship, between a company's project management expenditures and its project effectiveness.

• There was no meaningful relationship between the number of professionally-trained project managers (including Project Management Professionals (PMP ) and the company's ability to execute projects.

Companies were seen to be relatively weak in the project risk management knowledge area and in the project execution and project support phase areas, which confirmed the suspicions of many industry professionals.

This first study had weaknesses though. Among these weaknesses were:

• The survey population was self-selecting and principally the companies themselves conducted the project management maturity assessment. The Berkeley research team provided some quality assurance of the responses but not as much as ideally desired. Limited resources precluded a more comprehensive study.

• Project management maturity was contrasted with project cost and schedule indices. One complication was the question of budget and baseline consistencies between companies (e.g., authorized budget at concept versus authorized budget at contract signing). Perhaps more importantly, the cost index was probably of secondary importance for those enterprises whose revenues derived from the project's deliverable were not tightly coupled to the project's costs. For instance, software prices and revenues were more a function of market-driven pricing and perceived value, and not just a markup on project cost (as was the case in the construction industry).

• Project management cost accounting structures differed radically among companies, to the extent that tracking the cost of project management services was, at best, haphazard in most companies. Companies amortized project management training, for instance, quite differently. Moreover, the line between operations and project management was rarely clearly delineated; so salaries, for one, were quite difficult to apportion. On a more global level, many corporate accounting systems were designed to track functions (marketing, engineering, research and development [R&D]) but not the portion of engineering or accounting that directly, let alone indirectly, supported a project.

• The value of project management was measured by its return on investment (ROI). Some have argued for different measures. For instance, Knutson (1999) presents a benefit-cost calculation, but ignores the time value of money and ignores subtleties such as how to amortize project-related capital costs. Crawford (Cabanis-Brewin 2000), on the other hand, has proposed a "balanced scorecard approach", but does not specify how to define and cope with the various details. It also puts an artificial and masking weight on qualitative aspects in an attempt to balance them with quantitative factors.

To improve upon the previous study, the Berkeley team has taken a very active role in the assessment process, both in terms of guiding each participant through the assessment process and by performing follow-up interviews to ensure data quality and accuracy. A revamped assessment tool will help organizations to itemize their project management expenditures, lending to increased ROI calculations.