The Project Management Question and Answer Book

By a strategic event we normally mean an impact in time and scope change in corporation life that influences the whole corporation or a significant part of it. Very often a strategic event is called a strategic change.

The examples of strategic change may include:

• Political changes of the company status: Merging, selling parts of a market, redistribution of ownership between the private and public sector, etc.

• Changes in the internal structure of the company: Moving from a functional structure to a balanced matrix or introducing new management approaches such as introducing the methodology of total quality management.

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Strategic change can be caused by a number of situations:

• In an Ideal Situation: A decision made by top management for a significant improvement or change of business processes or product transitioning of the company to a new level of development.

• In a Normal Situation: A decision made by a company's top management under strong external pressure or in order to solve serious problems, such as a significant decrease of profits, a financial deficit, the low efficiency of management systems, etc.

• In a Bad Situation: A crisis and/or organizational collapse when further functioning of the organization in its current form becomes impossible.

Unfortunately, in most cases a bad situation leads to organizational destruction. At its best, the collapse decreases the efficiency of strategic changes; at its worst, it denies top management the opportunity to implement strategic actions. Therefore, the strategic change has to be carried out before the organization enters a crisis situation and the inevitability of a change becomes apparent.

It is easy to see that the change event fits all the characteristics of a project.

First of all, in order for a change to be successful, it has to:

• Be compact in time. If you try to prolong a change process for an unknown number of years, it is going to ruin the company.

• Have clearly formulated goals and clearly stated objectives in its scope. Any attempt to carry out a change that does not have a welldetermined scope will lead to a waste of money and time, and no result will be achieved.

• Be determined in budget. As a change event always considers expenditures to be made, you have to be careful that it does not lead the company to financial collapse.

• Have well-considered mechanisms of "getting in" and "getting out". The change process does not just happen; it is a special state of an organization that is characterized by specific management and financial schemes. Before it starts, you ought to have a clear understanding of how you are going to get the organization into this special state and how you are going to get it out of it.

As the change process fits the characteristics of a project, it can be managed with the application of project management methodology. However, this type of project has a number of specific features, including the external environment, the company organization, the project, and the long-term effects of a project on this external environment; the difficulties of applying classical financial justification methods and the need for more qualitative indicators of project success to be considered; the need for a more flexible, changeable chain of relations between the activities and the final results given more opportunities for changing any of the sections of the chain.

The modification of a project management methodology developed for international socioeconomic programs and projects enlarges the opportunities for applying project management to the internal projects of the company oriented toward implementing change. The modification is known under a number of names, including the one we like best— results-based or results-oriented project management methodology. The concept of a methodology is built on the idea of results chains describing project development from inputs to long-term results—sort of a WBS turned 90 degrees to the right where the major long-term results form the top level of the WBS. This is illustrated in Figure 7-4.

Figure 7-4: CLASSICAL WBS COMPARED TO RESULTS-BASED MANAGEMENT

The major differences between results-based management and a classical project management approach include:

• The orientation on long-term and medium-term project results mainly happening outside of the project scope and outside of the project manager's framework of authority.

• The ability to use qualitative result indicators along with quantitative indicators for both justifying the project and using performance management.

• The increased flexibility inside the sections of a result chain allowing change on any component of the chain including inputs, activities, outputs, outcomes, impacts, and indicators as the project is developing and its progress is monitored and analyzed using result indicators.