CHAPTER 2

Case Study: How a Global Aerospace Company Moves Strategy into Projects

Introduction

The principal aim of all the case studies was to obtain evidence and to document the processes, practices, and people factors that each company uses to translate corporate strategy into project strategy. The UCL research team (the authors) carried out a number of semi-structured interviews with senior managers from the business and project management areas of each of the participating companies, using sets of questions given in advance of the interviews. Detailed notes of the interviews and information extracted from each company's documentation were analyzed and used to compile case study reports. Confidential copies of each report were sent separately to each company to verify the accuracy, validity, and analysis of the data and information, before being formally disseminated within each organization. The findings of each of the case studies are extracts from these reports and are published with the full consent of the companies involved.

Business Management, Integrated Program Management, and Project Management

The business process model (BPM), used throughout the company, is an equivalent model to the generic enterprise model identified in the literature, although it doesn't explicitly show the company's value delivery system. It comprises a number of major processes, as shown in Figure 2.1, and is an integral part of the company's Quality Management System. Each of the major processes has well-defined interconnecting sub-processes. The plan the business process defines the stages and business gates for all projects undertaken by the company and has integrated within it an integrated program management (IPM) process. The processes for developing business strategy and business plan deployment are also part of the plan the business process.

The IPM process is a process for managing the whole business and is equally applicable to the management of projects. The process comprises four phases as follows:

• Pre-program evaluation
• Planning
• Execution
• Closeout.

The company describes a program within the context of the IPM as simply a related series of activities, stretching out over time, intended to achieve defined objectives. It also uses the word program to make clear that the IPM concept is not limited to projects or products and takes the view that every action within the company must belong to a program and every program must have a customer, objectives, and a budget. The company defines a project as having a life cycle that includes project opportunity, commitment, execution, in-service support, serial production, and disposal. The terms project and program are also used interchangeably in certain documents within the company.

The seven principles of IPM, constituting best practice, are as follows:

• All activity is defined by programs
• Programs determine resource group size
• Commitment-acceptance
• Managing the resource
• Financial control
• Conflict resolution
• Change control.

Creating and Translating Corporate and Business Strategy into Project Strategy

The company creates and translates its strategy from the corporate to project level by means of a hierarchy of processes: these are contained within the overall plan the business process and are outlined in Figure 2.2. Corporate strategy, within the company, is a portfolio of integrated business strategies that will deliver corporate intent and are consistent with the financial constraints facing the company. The process by which this is achieved is create corporate strategy, one of eight top-level processes of the plan the business process. The process operates at two levels: the development and agreement of a corporate strategy plan (CSP) by the Board and engaging the business sectors to arrive at a committed set of business strategies that fully support the CSP.

The corporate strategic requirements are analyzed, taking into account the relevant internal and external influences and particularly the competitive environment. The process owners, business sectors, and business units provide most of the information necessary to carry out the analysis. A portfolio of strategies is developed—including commitments and opportunities submitted by the businesses—to form the CSP for the Board to discuss, approve, and commit to. Once this has been completed, the CSP becomes the baseline against which corporate strategy is monitored. The CSP also contains the corporate financial plan (CFP), which summarizes the financial element of corporate strategy. Corporate strategy is then communicated to the business sectors and business units in order for them to formulate their own strategies, plans, and commitments, as indicated in Figure 2.2.

Business Strategy

The company's business sectors and business units utilize the create business strategy and five-year commitment (FYC) process to manage their strategy, as shown in Figure 2.2. The corporate objectives, targets, and risks—communicated by corporate headquarters to the business sectors—are translated into business objectives, targets, and risks for the business units. In turn, they are used as inputs to continuously update corporate strategy. Each business sector strategy comprises the strategies of all the business units within its sector and must be in line with—and contribute to—corporate strategy. Similarly, the combined strategies, plans, and commitments of the business units have to meet the agreed business sector objectives and targets. Each business sector provides and maintains a fully documented FYC, which commits the business sector, through its set of outline business unit plans, to achieve its objectives and those of the company. The management of business strategy is a continuous process; the FYC and business plans are reviewed and updated at least once a year.

Business sector strategy is cascaded to the business units through the deploy business plans process, as indicated in Figure 2.2. The outlining of business plans resulting from the create business strategy process are developed by the business units to a level of detail sufficient to achieve the agreed objectives and targets for the business unit and to agree on budgets for the activities. They are also used to deploy business unit objectives and targets in a meaningful way and to provide the means for reviewing performance against the plan. Business units then develop detailed business plans that include plans of all the types of resources required to support the strategy and the timescales of their acquisition. This process, in effect, transforms the commitments of each business area into meaningful objectives for the program or project teams and every individual. When the budget for a business plan has been agreed-upon, the business plan is transformed into a program of work.

The lead-and-manage programs process, shown in Figure 2.2, is another of the eight top-level processes of the plan the business process. This process transforms business plans into programs of work and comprises the four phases of Integrated Program Management, as follows:

• Pre-program evaluation
• Planning
• Execution
• Closeout.

During the planning phase, an integrated program or project team develops a program or project plan using a twelve-stage program planning process. The process starts by capturing the requirements of the program or project and finishes with the assembly of, and commitment to, the plan and the delivery of a program master schedule. The plan includes, among other things:

• Program deliverables and milestones;
• Roles to manage Work Breakdown Structure (WBS) deliverables;
• Management and reporting requirements for each package of work;
• Formal control gates to ensure that all work done meets the defined customer requirements, deliverables, specifications, cost, and schedule;
• Assignment of budget and resource to each activity.

The project management process and practices are also incorporated within the lead and manage programs process, as highlighted in Figure 2.2. These are shown in more detail in Figures 2.3 and 2.4 and in Table 2.1.

The stages of the project process cover all the activities associated with the project lifecycle, as demonstrated in Figure 2.3. There are management gates between the stages. Each of these stages has a number of phases; for example, Stage 1 has eight phases, as shown in Figure 2.4. (The stages are also referred to at the project management process.) A number of key topics, shown in Table 2.1, are addressed during each of the phases, one of which is project strategy. Project strategy is managed, in considerable detail, by project teams throughout all the stages and all the associated phases of the project management process.

Table 2.1Key topics (disciplines/practices) for the stages of the project management process

At first glance, the list in Table 2.1 appears to omit a number of key topics (practices) identified in Figure 1.9 (Chapter 1), such as production and technical management. However, on closer examination of the company's project management process, these and other practices are embedded within the process and are frequently referred to under the general heading of capability acquisition.

In addition to identifying the key project strategy activities for each of the stages and phases of the project lifecycle, the company also provides the methods and techniques that enable the key activities, including project strategy, to be undertaken consistently across the organization; the structure of these is shown in Figure 2.5.

Structured Approach to Project Strategy Management

A hierarchical schematic of the way the company creates and moves strategy from the corporate level through to the close of a project can be developed by combining the figures and tables above, as demonstrated in Figure 2.6. This figure shows the end-to-end structured approach used by the company to manage strategy.

The company also has a specific process: Manage strategic change, for managing a rapid response to changes that may demand a review of strategy and if required, for identifying the need for—and the creation of—action plans to maintain the currency of the strategy. Each business also has a process for rapid reaction to unexpected changes that might impact their strategy. These include a review of the impact and necessary actions to accommodate and take advantage of the changes. The corporate development group and business sectors maintain visibility and communication links back to corporate strategy planning to ensure that any changes that impact the corporate strategy—and hence their own strategy—are rapidly identified.

Competencies, Roles, Responsibilities, and Accountabilities for Moving Strategy

Emphasis is placed upon the competency and relevant training of those operating the processes shown in Figure 2.2. In the case of the lead-and-manage programs process, for example, people will have competency in program management gained from:

• Experience of working on programs and projects;
• IPM training courses;
• Project management training courses predicated on the project management process, as shown in Figures 2.3 and 2.4;
• Courses designed to develop program management behavioral competencies, knowledge, and skills.

The roles and principal responsibilities for program management within the lead-and-manage programs process are as follows:

• To act as the primary point of contact for the customer and be accountable for customer satisfaction for the program;
• To deliver the committed business case and provide the organization with the necessary information for managing the business;
• To establish, develop, and maintain the WBS, and therefore all the packages of work (control accounts) necessary to deliver the program;
• To develop the plan for the program (including risk mitigation) and instruct release of the program budget to authorize the starting and stopping of all programs of work;
• To review progress against plans, to identify when corrective action is required, and to agree and initiate the necessary program changes, including re-allocation of resources;
• Program management has the necessary authority (including budget control), accountability, and responsibility for completing a given program and ensuring it meets the schedule, specification, and business case requirements.

As mentioned previously, the lead-and-manage programs process also includes the project process which identifies, among other things, the purpose, objectives, key activities, and key outputs for each stage and phase of the project management process, as well as those with the lead responsibility and accountability for successfully carrying them out. Those identified include such people as the managing director, bid manager, and project manager. The core behavioral competencies for project directors and project managers are shown in Figure 2.7.

In addition to the core behavioral competencies, the company has also defined project management functional competencies (i.e., knowledge and skills). These competencies, grouped into several categories, are used to develop the elements of the strategic framework (as outlined in the APM BOK) and subsequently, to create project strategy. The categories of strategic management competencies, and the processes to which they are applicable, are as follows:

• Strategic—including strategy/project management plan and value management;
• Control—including work content and scope management;
• Technical—including requirements management;
• Commercial—including business case, financial management, and procurement;
• Organizational—including lifecycle design and management as well as organizational structure and roles.

These competencies are also related to the job requirements for project directors, project managers, and other professional project management staff. For the elements mentioned above, the levels of competency for project directors and project managers are the same in most instances. However, in one or two areas, such as requirements management, the project manager is required to have a higher level of competency.

Conclusions

This case study revealed that strategy moves from corporate to projects through extensively integrated company-wide processes and practices, deployed by highly skilled professional people. One big advantage of this approach is that it forms part of the company's Quality Management System and is, therefore, mandatory. The processes and practices are widely used, although—as in any system—there are opportunities for improvement. By virtue of the level of integration, strategy is likely to be developed consistently and coherently throughout the businesses, programs, and projects of the company. Should any event arise that threatens the intended strategy, there are mechanisms for managing the situation and maintaining the currency of the strategy.

The company's business model is consistent with the widely accepted generic model identified in the literature. The processes for creating and continuously updating corporate, business sector, and business unit strategies—and deploying them—emanate from the business model; its outputs are used to develop and manage project strategy. The activities associated with these processes reflect those identified for strategic management in the literature. The level of integration, the degree of interfacing, and the close involvement of corporate and business strategists and project management staff developing strategy provides an example of how to formulate strategy and start the process of implementation. The highly integrated and structured approach used by the company to translate corporate and business strategies into project strategy, and then to manage it through the entire project management process and project lifecycle, demonstrates the importance of project strategy and its management, as well as the level of priority which it should be given. It provides a very good model of how this can be done.

The project process is an integral element of the business model and is established as a key business process. This is in contrast to the generic business model that fails to recognize and identify the project management process as a key business process. One of the main objectives of the research project was to gather and present evidence that would confirm to the wider academic and business community that the project management process is a key business process. The prominence and degree of importance that the company gives to integrated program management, as well as the management of programs and projects, substantially strengthens the case for a change in perception and a recognition by the wider academic and business community that the project management process is a key business process.

The project management process is used to manage portfolios of programs and projects in addition to separate projects, but there was some criticism that the program/project management tools and techniques were refined to such a level that they were not flexible enough to be used on short-term or non-standard projects and that the project management processes were ignored because they were too much of a burden on small projects. However, others said that they could tailor the requirements of the processes and they took a more flexible approach on how they used them. It was also indicated that some operational processes were being used to manage certain production projects, in preference to the project process. However, despite these criticisms, it was clear that the gated review process was widely used.

The importance of effective documentation to enable project teams to manage projects is evident from the findings of the case study. The sets of documents supporting the processes used by the company encapsulate very effectively the way the company performs its business. These include comprehensive flowcharts of the processes that identify the associated inputs and outputs, and the competencies, authorities, and training required to undertake the tasks. These are widely available on the company's Intranet.

A comprehensive range of key project management topics (activities) and the methods and techniques defining how they are carried out are used in all the stages and all the associated phases of the project management process. Elements of these activities, otherwise described as practices, influence project strategy and are identified or embedded in the process documentation. Embedding some of these, however, tends to make them less visible. The company's range of practices largely reflects the practices shown in the model that are synthesized by the research team from literature review sources.

The professionalism of project management staff is evident from the approach the company uses to train and develop its staff. The recognition, prominence, and commitment given to developmental and ongoing professional training by the company—in addition to defining the roles, responsibilities, and competencies—are perceived to be best practice. The project management core behavioral competencies for project directors and project managers are comprehensive but succinctly defined. The project management functional competencies, which senior practitioners believe program and project managers should possess, are clearly identified. There is, however, little reference to strategy in the core competencies, although it is implied. This is in contrast to the functional competencies that include categories of strategic management competencies required to manage project strategy. These competencies are related to the job requirements for project directors, project managers, and other professional project management staff. Furthermore, the job requirements and competencies are linked to the generic project management processes and key practices. This example serves as a model of how to integrate competencies with project management processes and practices.