Project Portfolios in Dynamic Environments: Sources of Uncertainty and Sensing Mechanisms

Abstract

This article addresses the research question: How is uncertainty affecting project portfolios managed in dynamic environments? The management of four portfolios was studied in two large multidivisional corporations. The portfolios were characterized by a high degree of uncertainty and many interdependencies between the projects. The results of this research indicate that the sources of change go beyond the two groups identified in The PMI Standard for Portfolio Management (Project Management Institute, 2006), that is, (a) Portfolio Performance and (b) Business Strategy Changes. The sensing mechanisms put in place by both companies primarily addressed uncertainty related to project scope.

The role of project portfolio management in fostering both deliberate and emergent strategy

“…deliberate strategy implementation) becomes less relevant for success under conditions of high environmental turbulence further highlights the relationship portfolio management's role in shaping strategy in response to change. By illustrating how strategic controls at the portfolio level provide mechanisms for sensing and reconfiguring through emerging strategy recognition, and revealing that the level of environmental turbulence affects the role of deliberate strategy implementation activities, the results of this study support previous studies that position project portfolio management as a dynamic capability (Killen and Hunt, 2010;Killen et al, 2007;Killen et al, 2012;Petit and Hobbs, 2010). The findings also provide support for arguments that a dual process approach could be at play where the deliberate strategy implementation approaches operate in a relatively stable fashion, while emerging strategy recognition aspects cater for dynamism (Schreyögg and Kliesch-Eberl, 2007).…”

“…From a project and project portfolio management perspective, the two-way relationship between strategy and projects has been observed in several studies (see for example Killen and Hunt, 2010;Poskela et al, 2005;Poskela and Martinsuo, 2009) and project portfolio management has been highlighted as a dynamic capability due to the advantages offered in enabling organizational response to change (Killen and Hunt, 2010;Killen et al, 2012;Petit, 2012;Petit and Hobbs, 2010). Mintzberg and Waters (1985, p. 271) conclude that strategy formation 'walks on two feet, one deliberate, the other emergent'.…”

Stochastic forecasting of project streams for construction project portfolio management

“…The idea of uncertainty impact on organizations is well established in many disciplines from psychology to economics (Petit and Hobbs 2010). Environmental uncertainties and their relation to organizations are analogous to the state of a person with a shortage of critical information about the environment.…”

Shedding New Light on Project Portfolio Risk Management

“…This perception has opened a new research area in the literature: the management of this version of uncertainty. Available studies discuss this subject both from a theoretical [45][46][47] and empirical point of view [48]. The second significant aspect of risk management involves the consideration of risk as an event that not only generates hazards, but also reveals opportunities that may be taken by the organisation [5,9,12].…”