Key concepts

1.4 Key concepts

The following chapters introduce the three core concepts of this dissertation. Additionally, they present the rationale behind each concept.

1.4.1 Project management office

The PMO is commonly situated alongside other areas of the organization (Darling and Whitty, 2016), and it may operate at various organizational levels. Not every PMO has the same mandate and responsibilities, and as such, the PMO’s role in the management of projects varies from organization to organization. In a similar vein, the duties of a PMO may range from the development of a project methodology to providing support for ongoing projects. Duties may also include assuming responsibility for the governance of the organization’s project portfolio and developing project capabilities.

Hobbs and Aubry (2007) found considerable diversity and a lack of consensus regarding the responsibilities that should be included in a PMO (see also Monteiro et al., 2016). Moreover, there is a great variety in the terms used to name the function and a role a PMO takes in an organization. Monteiro and colleagues (2016) identified 25 unique names and found that Project Office, Project Management Office, Project Support Office, Project Management Centre of Excellence, Project Portfolio Office, and Program Office were among the most widely used in the literature. This dissertation defined a PMO as a project-oriented organization

20 Introduction

strategizing tool whose purpose is to renew organizational assets to maximize value contribution and to meet the organization strategic objectives.

1.4.2 Organizational fit, PMO, and organization value contribution

From an organization contingency theory perspective, organizational performance is the fit among an organization’s structures, assets, and the environment (e.g., Donaldson, 1987). In this situation, organizational assets interact with external environment as a system that produces desired outcomes (e.g., Miller and Friesen, 1984; Siggelkow, 2002). Organizational fitness of can be defined by using three criteria: 1) connectedness between the organizational assets, 2) synergy in which the interactions of the assets reinforce each other, and 3) coordination, as how a pattern of the assets support commonly agreed organizational objectives (Sankaran, Müller, and Drouin, 2017, p. 25).

Outcome of fitness can be measured as process efficiency; it is measured by the ratio of outputs divided by the inputs of a production process (e.g., McLaughlin and Coffey, 1990). In such a case, efficiency-related performance measures, such as process time, cost, and output quality, provide an accurate quantification of an outcome of the “fitness”. On the other hand, if the organization and its functions operate as an open system, then the production process inputs result in several outputs and outcomes that can be further refined as inputs of a cyclical process creating organization value. This type of open system adjusts itself by using feedback loops during the production process (e.g., Winter and Szczepanek, 2008), and it is necessary to quantify performance from a value creation perspective. For example, in an innovative delivery process, an organization and self-steering teams are likely to search for new value creation and co-creation possibilities with stakeholders, which need increased flexibility during the research

& development phase and require non-financial performance indicators.

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Similarly, Desouza and Evaristo (2006) suggested that shifting a PMO performance focus from efficiency to a holistic value creation perspective and the measures, such as project-, PMO-, or business value-centric, increases understanding how PMOs create value in a project organization. Further, Aubry et al. (2011) proposed that an organizational impact of a PMO should be defined as a balance between several value contribution dimensions. These dimensions are quantified with an examination of 1) rational goal accomplishments (such as those measures related to productivity), 2) benefits and growth of an organization, 3) capability development and learning, and 4) the organization’s internal process controls such as project processes efficiency, effectiveness, and process quality dimensions (Quinn and Rohrbaugh, 1983 in Aubry et al., 2011). This balanced value perspective is adopted in this dissertation.

1.4.3 An impact of an environmental turbulence on organizational value contribution Geraldi et al. (2011) introduced five types of organizational complexity dimensions: structural, environmental, dynamic, spatial, and socio-political complexity. Organizations manage this complexity by integrating and differentiating organizational structures, which in turn require integrative mechanisms such as a PMO and its processes to maintain high value creation of the organization assets. Generally, increased complexity decreases operational performance and value contribution, especially if complexity is not actively managed. However, properly-adjusted PMO roles and processes accelerate value creation and increase organization capability to meet strategic objectives in a complex environment.

Project organization complexity can be operationalized as the rate of change associated with the two intertwined dimensions of structural and dynamic complexity (Brady and Davies, 2014). Structural complexity is associated with internal project process and project’s product characteristics, such as interdependencies among the product elements. Dynamic complexity

22 Introduction

is associated with the rate of unexpected external changes i.e. operational environment turbulence. These two project organization complexity dimensions are commonly used mediators in project literature, and they are associated with both project and project organization success (Brady and Davies, 2014). In addition, this dissertation separates external environments into two dimensions: the organizational environment and PMO operational contexts. For example, the organization external environment can be characterized according to customer negotiation power, technological changes, and competition which all increase dynamic complexity and create turbulence. PMO operational context complexity can be mainly characterized according product and production process complexity dimensions.

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