Introduction
The Standard for Portfolio Management (Project Management Institute [PMI], 2008b) defines a project portfolio as: “a collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives” (p. 138). This standard proposes a process to manage project portfolios.
This process, like a number of previous publications on this topic (Artto, 2004; Cooper, Edgett, & Kleinschmidt, 2001; Shenhar, Milosevic, Dvir, & Tamhain, 2007), stresses the importance of the alignment of the project portfolio to the firm’s strategy, the identification, and prioritization of the projects being prime to ensure that firms execute the most beneficial projects.
The concept is analogous to financial portfolios where different factors are taken into consideration before investing: risks, returns, time-to-benefits, complexity, portfolio balance, and so forth. Similarly, the primary focus of project portfolio management (PPM) has been on how to select and prioritize projects to ensure that risks, complexity, potential returns, and resource allocations are balanced and aligned to the corporate strategy in order to provide optimal benefits to the enterprise.
The publications on PPM, including the normative body of knowledge, such as the PMI standards and the publications from the Office of Government Commerce (OGC), are fairly recent and most of them have attempted to address the most pressing needs rather than to cover all aspects in this field. For example, the PPM literature makes little mention of potential disturbances to the portfolio typically found in dynamic environments, such as new projects, terminated projects, delayed projects, incorrect planning due to high uncertainty, changing priorities, lack of resources on projects, changing business conditions, and new threats and opportunities, which might impact the successful implementation of the portfolio between portfolio planning cycles. It is not argued that the current processes and governance framework are incorrect or inadequate but just incomplete. It is therefore suggested to supplement the existing processes with additional empirical information.
The Standard for Portfolio Management (Project Management Institute, 2008b) does suggest that changes to the strategy might result in a realignment of the portfolio.
However, ad hoc disturbances to the ongoing and approved project portfolios have been neglected. For example, the notion of new project requests to be included in an existing project portfolio is barely mentioned. This assumes an environment characterized by stability, predictability, and the ability to deploy a business strategy through a top-down cascading process. The study of the management of single projects has shown that organizations in dynamic environments face additional challenges: changing goals, continuous re-planning, shorter time for decisions, poorer quality of information, and constant reallocation of resources. Empirical evidence shows that organizations facing higher uncertainty in dynamic environments put in place different approaches to maintain efficiency while keeping the organization flexible. The main assumption of this research is therefore that, for many firms, the environment is unstable, and that uncertainty must be managed to mitigate the impacts on project portfolios.
Preliminary research work performed at two firms during the summer of 2008 in addition to discussions with portfolio managers has indicated that firms in turbulent environments are indeed trying to put in place specific mechanisms to manage their project portfolios. Feedback received from academics and practitioners at the doctoral poster session at the PMI® Research Conference 2008, in Warsaw, Poland, confirmed a strong interest in this topic. Portfolio managers are looking for tools and concepts to assist them, but unfortunately, the mechanisms to adapt to changing environments have been neglected in the PPM literature. This is somewhat surprising considering that management in the face of uncertainty has been studied for a number of years in the fields of (1) change management of single projects, (2) organization theory, and (3) strategy theory.
The fact that this topic has been neglected in the area of PPM should not be seen as an indication of its lack of importance or relevance for the business community. The study of change management is covered in detail in normative bodies of knowledge in project management published by Project Management Institute, the Construction Industry Institute, and the Association for Project Management (APM). In this body of literature, changes are considered costly and something to be minimized. A number of techniques have been developed to control them.
Based on the observations that (1) the management of project portfolios once projects are selected and prioritized has been only superficially investigated, and (2) that many project portfolios face dynamic environments which results in a high level of uncertainty, this research proposes to address the following research question: How is uncertainty affecting project portfolios managed in dynamic environments? This includes the study of processes, procedures, tools, organizational structures, governance, and decision rules. The objectives of the research can be summarized as follows:
• to identify the organizing mechanisms2 used to manage uncertainty affecting project portfolios in dynamic environments;
• to evaluate the use of the dynamic capability framework for the study of project portfolios;
• to study project portfolio management at the operational level using concepts borrowed from sensemaking (traditionally used to study the interpretative mechanism at individual level) and of dynamic capabilities (traditionally used to study strategic processes at corporate level); and
• to provide feedback to academicians, practitioners, and standard bodies on potentially useful practices in the field of project portfolio management.
Approaches developed to manage single projects in dynamic environments (such as different planning techniques, scope control, life cycle strategies, planned flexibility, controlled experimentation, and time-based pacing) could be used as a starting point.
Weick’s Sensemaking Theory (1979, 1995a, 2001, 2003) also provides a good framework for studying the research topic. Weick suggests that rather than focusing on organizations, attention should be redirected to the process of organizing. In this theory, environments are not considered to exist but are scanned and interpreted. When changes occur in the environment, they must first be interpreted, and courses of action selected using a set of rules based on the retention of patterns and knowledge from previous experiences.
Another body of knowledge, which helps to answer the research question, comes from strategy theory. The publications on dynamic capabilities argue that it is no longer sufficient to develop unique resources or capabilities (as initially proposed in the Resource-Based View) to gain a strategic advantage but that resources and capabilities must be constantly reallocated and reoptimized to adapt to changing environments. PPM can be considered a good example of a dynamic capability but more importantly Teece (2009) proposes a dynamic capabilities framework that can be used in the study of PPM.
The framework includes the following capabilities: sensing, seizing, and transforming/reconfiguring. Teece includes knowledge management under the transforming dynamic capability, a concept analogous to Weick‘s retention in the sensemaking model. However, the activities related to the organizational memory (i.e., knowledge management and retention) are excluded from the study because this topic is very broad and would require a study in itself over a long period. In addition, it does not specifically address the research question.
Even though the concept of dynamic capabilities has been prevalent in the strategic management literature for at least 10 years, solutions are not readily available to portfolio managers. Only a few such capabilities have been investigated empirically, and unfortunately, there are very few descriptions of how firms can implement and maintain dynamic capabilities in practice. Describing and analyzing how portfolios are managed in dynamic environments has the potential to provide empirical evidence of a dynamic capability and to contribute to a better understanding of this phenomenon.
This report summarizes the results of research carried out between 2008 and 2010. Chapter 1 presents a literature review beginning with how PPM has evolved to become a set of governance processes documented in standards and other bodies of knowledge. The concept of uncertainty is then discussed and compared to other similar terms such as unexpected events, deviations, and risks. Different project management approaches, which have been developed to cope with dynamic environment, are then presented. These are then analyzed in relation to the goals of PPM to try to identify the current limitations in its use in dynamic environments, when uncertainty is high. Teece’s dynamic capability is then presented. This theory is the foundation for the conceptual framework, described in Chapter 2. It is based primarily on Teece’s dynamic capabilities and it is composed of three main levels: organizational context, dynamic capabilities, and organizing mechanisms. Chapter 3 describes the methodology. It summarizes the research strategy and provides the rationale for the use of multiple cases. The case study design and methods (including pilot cases, selecting the cases, collecting the evidence, analyzing the evidence, and reporting
the results) are then described. The chapter concludes with limitations and exclusions to the study and the ethical aspects which were taken into consideration during the research.
Chapter 4 provides a detailed description of the two firms and of the four portfolios that were studied. A detailed description of the type of uncertainty encountered during a period of at least one year appears in Chapter 5, and the different mechanisms identified in each of the components of the dynamic capabilities framework (reconfiguring, seizing, sensing, transforming, second-order seizing, and second-order sensing) are discussed for each firm in Chapters 6 and 7. These mechanisms are then analyzed within the context of the uncertainty they were put in place to manage. The results of a cross-case analysis are presented in Chapter 8.
Chapter 9 discusses the implications for theory and practice of the results presented in the previous chapter. It first provides a discussion of findings related to the use of dynamic capabilities as a conceptual framework. This is followed by some reflections on PPM in dynamic environments leading to a number of propositions that could be explored in future research. The conclusion summarizes the contributions of the research and its limitations.
Table of Contents
List of Figures ..............................................................................................xiii
List of Tables ................................................................................................xv
List of Acronyms ..........................................................................................xvii
Abstract .......................................................................................................xix
Executive Summary...................................................................................... xxi
Introduction ...................................................................................................1
Chapter 1: Literature Review ................................................................. 5
1.1 Project Portfolio Management .................................................................. 5
1.1.1 Origins of PPM ..................................................................................... 5
1.1.2 Project Portfolio Definitions ................................................................... 6
1.1.3 Project Portfolio Management ............................................................... 8
1.1.4 Recent Themes .................................................................................... 9
1.1.5 Goals of Project Portfolio Management ..................................................10
1.1.6 Project Portfolio Governance .................................................................11
1.1.7 Methods for PPM ..................................................................................13
1.1.8 Limitations of Current PPM Literature .....................................................19
1.2 Dynamic Environments and Uncertainty ....................................................20
1.2.1 Dynamic Environments .........................................................................20
1.2.2 Risks and Risk Management ..................................................................22
1.2.3 Changes, Deviations, and Unexpected Events .........................................24
1.2.4 Uncertainty Management versus Risk Management .................................22
1.2.5 Managing Uncertainty in Project Portfolios ..............................................25
1.3 PPM Challenges in Dynamic Environments .................................................27
1.3.1 Changing and Uncertain Goals ...............................................................28
1.3.2 Detailed Planning and Continuous Re-planning ........................................28
1.3.3 Balancing Decision Quality Against Decision Speed ..................................28
1.3.4 Imaginary Precision—Poor Quality of Information ....................................29
1.3.5 Race to Resolve Project Unknowns .........................................................29
1.3.6 Resource Reallocation and Redistribution ................................................29
1.3.7 Managing the Stream of New Projects to the Portfolio ..............................30
1.3.8 Summary ..............................................................................................31
1.4 PPM Processes Contingent on Environment ................................................31
1.4.1 Early Foundations ..................................................................................31
1.4.2 Empirical Evidence of Different PPM Methods Under High Uncertainty ........32
1.4.3 Consequences for PPM in Dynamic Environments .....................................33
1.5 Different Project Management Approaches for Dynamic Environments ..........34
1.5.1 Environment Manipulation: Making Dynamic Static ...................................34
1.5.2 Emergent Planning Approaches ...............................................................35
1.5.3 Scope Control ........................................................................................35
1.5.4 Monitoring and Control Mechanisms of Projects .......................................36
1.5.5 Buffering and Boundary-Spanning Activities .............................................37
1.5.6 Life Cycle Strategies ..............................................................................38
1.5.7 Flexibility in Process and in Product ........................................................39
1.5.8 Controlled Experimentation—Probing the Future ......................................40
1.5.9 Time-Based Pacing.................................................................................40
1.5.10 Using the Project Management Techniques at PPM Level ........................41
1.6 Dynamic Capabilities ................................................................................41
1.6.1 Dynamic Capabilities .............................................................................42
1.6.2 Capabilities ...........................................................................................43
1.6.3 What Is Dynamic in Dynamic Capabilities? ..............................................46
1.6.4 Dynamic Capabilities as a Framework .....................................................47
1.7 Concluding Remarks on Literature Review .................................................48
Chapter 2: Conceptual Framework..........................................................51
2.1 Organizational Context .............................................................................51
2.2 Organizing Mechanisms as the Unit of Analysis ..........................................52
2.3 Distinguishing Reconfiguring and Transforming .........................................53
2.4 Updated Conceptual Framework ...............................................................55
2.4.1 Dynamic Capabilities Leading to Reconfiguring .......................................55
2.4.2 Dynamic Capabilities Leading to Transforming ........................................56
2.4.3 Higher-Order Capabilities ......................................................................57
Chapter 3: Methodology ........................................................................59
3.1 Research Strategy ..................................................................................59
3.1.1 Selecting a Methodology Matching the Research Objectives ....................59
3.1.2 Overview of Research Process ..............................................................61
3.2 Preparing for Data Collection ..................................................................62
3.2.1 Testing the Instruments ......................................................................62
3.2.2 Updating the Research Question and the Interview Guide ......................62
3.3 Case Selection .......................................................................................63
3.3.1 Using Multiple Cases ...........................................................................63
3.3.2 Case Study Selection Criteria ...............................................................63
3.3.3 Cases Selected ...................................................................................65
3.3.4 Cases Comparison ..............................................................................65
3.4 Collecting the Evidence ..........................................................................67
3.4.1 Data Collected ....................................................................................67
3.4.2 Sources of Evidence ............................................................................71
3.5 Analyzing the Case Study Evidence .........................................................72
3.5.1 Narrative ............................................................................................73
3.5.2 Portfolio Plans and Other Documents ...................................................73
3.5.3 Interview Coding ................................................................................74
3.5.4 Within-Case Analysis ...........................................................................74
3.5.5 Updating the Conceptual Framework ....................................................74
3.5.6 Cross-Case Analysis..............................................................................74
3.6 Reporting the Results .............................................................................75
Chapter 4: Detailed Case Descriptions...................................................77
4.1 Case Description: Company Soft ..............................................................77
4.1.1 Organizational Context (Company Soft) .................................................77
4.1.2 Description of Portfolio Soft1 ................................................................ 79
4.1.3 Description of Portfolio Soft2 ................................................................ 82
4.2 Case Description: Company Fin ................................................................84
4.2.1 Organizational Context (Company Fin) ...................................................84
4.2.2 Description of Portfolio Fin1 ...................................................................86
4.2.3 Description of Portfolio Fin2 ...................................................................87
Chapter 5: Types of Uncertainties ...........................................................91
5.1 Type and Impact of Changes on Portfolio Soft1 ..........................................91
5.1.1 New Product .........................................................................................91
5.1.2 Project Performance ..............................................................................92
5.1.3 Changes in Processes ............................................................................93
5.1.4 Need for Customization .........................................................................93
5.1.5 New Customers and New Market ...........................................................93
5.1.6 Changes in Agreements with Third-Party Suppliers .................................94
5.1.7 Structural Reorganizations ....................................................................94
5.1.8 Technology ..........................................................................................94
5.1.9 Summary of Changes in Portfolio Soft1 ................................................. 95
5.2 Type and Impact of Changes in Portfolio Soft2 ..........................................95
5.2.1 Evolving Priorities ................................................................................ 96
5.2.2 Changes in Processes ........................................................................... 96
5.2.3 Financial Structure ............................................................................... 96
5.2.4 Structural Reorganizations .................................................................... 97
5.2.5 Technology .......................................................................................... 97
5.2.6 Change in Business Strategy ................................................................. 98
5.2.7 Summary of Changes in Portfolio Soft2 .................................................. 98
5.3 Type and Impact of Changes in Portfolio Fin1 ............................................98
5.3.1 Interpretation of the Norm .................................................................... 99
5.3.2 Change in Norms ................................................................................ 100
5.3.3 Project Performance ........................................................................... 100
5.3.4 Portfolio Budget Reduction .................................................................. 100
5.3.5 Availability of Key Competences .......................................................... 100
5.3.6 Organizational Change ........................................................................ 101
5.3.7 Summary of Changes in Portfolio Fin1 .................................................. 101
5.4 Type and Impact of Changes in Portfolio Fin2 ..........................................101
5.4.1 Change in Norms ............................................................................... 101
5.4.2 Interpretation of the Norm ................................................................. 102
5.4.3 Project Performance ........................................................................... 102
5.4.4 Availability of Key Competences .......................................................... 103
5.4.5 Organizational Changes ....................................................................... 103
5.4.6 Summary of Changes in Portfolio Fin2 ............................................... ...103
6.1 Reconfiguring .........................................................................................105
6.1.1 Scope-in versus Scope-out (R1.1) - (Portfolio Soft1 only) ........................106
6.1.2 Reconfiguring the Project Portfolio (R2) .................................................108
6.1.3 Resource Allocation and Reallocation (R3) ............................................ 110
6.2 Seizing ...................................................................................................114
6.2.1 Product Portfolio Management (SZ1)...................................................... 115
6.2.2 Project Scope Management (SZ2) ......................................................... 118
6.2.3 Project Portfolio Governance (SZ3) ....................................................... 121
6.3 Sensing ..................................................................................................122
6.3.1 Dedicated Role for Specifying Content (SS1) ......................................... 123
6.3.2 System Management Group (SS2) ........................................................ 125
6.3.3 Early Demonstrations (SS3) ................................................................. 126
6.3.4 Central Tool for Requirements (SS4) ..................................................... 127
6.3.5 Ad Hoc Customer Demands Assessment (SS5) ....................................... 128
6.3.6 New Special Process for Customer Trials (Portfolio Soft1 Only) (SS6) .......128
6.3.7 Innovation Involving Employee Contributions (Portfolio Soft1 Only) (SS7).130
6.3.8 Roadmaps and Multi-Project Plans (SS8) ............................................... 130
6.3.9 Status Reports (SS9) ............................................................................ 131
6.4 Links between Uncertainty and Sensing Mechanisms ..................................132
6.5 Transforming ...........................................................................................133
6.5.1 Transforming the First-Order Sensing-Seizing-Reallocating (T1) ............... 134
6.5.2 Project Management Processes (T2) ...................................................... 137
6.5.3 Product Development Processes (T3) .................................................... 140
6.5.4 Structural Reorganization Supporting the Project Portfolio (T4) ............... 140
6.5.5 Flexibility Through Product Structure (T5) ..............................................140
6.6 Second-Order Seizing ..............................................................................142
6.6.1 Setting Targets (SOZ2) ......................................................................... 144
6.6.2 Selecting the Required Transformations (SOZ3) ......................................144
6.7 Second-Order Sensing ..............................................................................144
6.7.1 Dedicated People for Process Improvement (SOS1) ................................ 145
6.7.2 Project Management Office (SOS1.3) ..................................................... 147
6.7.3 Maturity Models (SOS3) ........................................................................ 148
6.7.4 Audits and Final Reports (SOS4) ........................................................... 148
6.7.5 Metrics, Scorecards, and Benchmarks (SOS5).......................................... 149
7.1 Reconfiguring ..........................................................................................151
7.1.1 Reconfiguring the Project Portfolio (R1) ................................................. 151
7.1.2 Resource Allocation and Reallocation (R2) .............................................. 153
7.1.3 Project Content (R3) ............................................................................. 156
7.2 Seizing ....................................................................................................157
7.2.1 Business Analysts (SZ1) ........................................................................ 157
7.2.2 Project Scope Management (SZ2) .......................................................... 159
7.2.3 Project Portfolio Governance (SZ3) ........................................................ 160
7.3 Sensing ...................................................................................................162
7.3.1 Dedicated Role for Monitoring Norm Updates (SS1) ................................ 163
7.3.2 Dedicated Role for Specifying Project Content (SS2) ............................... 165
7.3.3 Regular Validation Workshops and Early Deliveries (SS3) ........................ 165
7.3.4 Meeting Competitors (SS4) ................................................................... 166
7.3.5 Multi-Project Plans (SS5) ...................................................................... 167
7.3.6 Dependency Matrix (SS6) ..................................................................... 167
7.3.7 Status Reports (SS7) ............................................................................ 168
7.4 Links between Uncertainty and Sensing Mechanisms ..................................168
7.5 Transforming ...........................................................................................169
7.5.1 Transforming the First-Order Mechanisms (T1) ....................................... 171
7.5.2 Project Management Processes (T2) ...................................................... 171
7.5.3 Product Development Processes (T3) .................................................... 172
7.5.4 Organization Structure (T4) ...................................................................172
7.6 Second-Order Seizing and Second-Order Sensing .......................................173
8.1 Comparing Changes and Uncertainties ......................................................175
8.2 Organizing Mechanisms Replicated in All Four Project Portfolios ................ 177
8.2.1 Managing Scope ................................................................................. 177
8.2.2 Dedicated Role for Scope Management ................................................ 178
8.2.3 Multi-Project Plans and Roadmaps ....................................................... 179
8.2.4 Managing Dependencies Between Projects ........................................... 179
8.2.5 Monitoring Portfolio Performance ........................................................ 179
8.2.6 Shorter Projects and Iterations ............................................................ 180
8.2.7 Strict Portfolio Yearly Budgets ............................................................. 181
8.2.8 Using Reserves to Cater for Uncertainty ............................................... 182
8.3 Differences in Organizing Mechanisms in Highly Turbulent Environments ... 182
8.3.1 Amount of Transforming Activities ........................................................ 182
8.3.2 Second-Order Sensing and Seizing Mechanisms ..................................... 185
8.3.3 Higher Level of Uncertainty: More Sensing Mechanisms ......................... 185
8.3.4 Balancing Using Sophisticated Resource Planning .................................. 186
8.3.5 Re-organizing to Support Portfolios or Despite Portfolios ........................ 186
Chapter 9: Discussion ............................................................................189
9.1 Dynamic Capabilities ...............................................................................189
9.1.1 Reconfiguring versus Transforming .......................................................189
9.1.2 Second-Order Sensing and Second-Order Seizing ...................................190
9.1.3 Lessons on Using the Dynamic Capabilities Model to Study PPM ..............191
9.2 Project Portfolio Management in Dynamic Environments ............................192
9.2.1 Uncertainty Management ......................................................................192
9.2.2 Project Portfolios.................................................................................. 194
9.2.3 Project Portfolio Management ............................................................... 197
9.3 Concluding Remarks on Discussions ..........................................................200
Conclusion ....................................................................................................201
Appendices ...................................................................................................207
Appendix A : Comparison of Definitions of Portfolio..........................................209
Appendix B : Characterizing Uncertainty in Projects .........................................211
Appendix C : Comparison of Dynamic Capability Definitions ..............................212
Appendix D : Overview of Documents Collected ...............................................214
Appendix E : Interview Guide..........................................................................216
Appendix F : Details of Interviews....................................................................220
Appendix G : Description of Decision Boards At Company Soft ..........................221
References ...................................................................................................223
Literature Review
This chapter reviews how project portfolio management (PPM) has evolved over time to become a set of governance processes documented in standards and other bodies of knowledge. The concept of uncertainty is then discussed and compared to other similar terms such as unexpected events, deviations, and risks. Different project management approaches, which have been developed to cope with dynamic environment, are then presented. These are analyzed in relation to the goals of PPM to try to identify the current limitations in its use in dynamic environments, when uncertainty is high. Finally, Teece’s dynamic capability theory is presented to provide the theoretical base for the conceptual framework presented in Chapter 2.
This section describes how the empirical and theoretical foundations of project portfolio management (PPM) have developed to bring more focus on the selection and prioritization of projects to ensure value maximization and alignment to the strategy of firms managing multiple projects. PPM governance and processes are then briefly described to identify some of the latest understandings of the current limitations and unresolved issues related to the topic proposed in this research.
1.1.1 Origins of PPM
The concept of PPM is based on the earlier theories of portfolio selection in the field of finance. In 1952, Harry Markowitz published his seminal paper “Portfolio Selection,” where he lays down the foundations for the modern portfolio theory based on the now well-established notion of efficient frontier between the expected return and the risk (Markowitz, 1952). Portfolio diversification existed well before 1952. Investors knew that they had to invest in a variety of securities to increase their revenue while minimizing risks. A subsequent publication by Markowitz (1999) actually dates the concept back to the 17th century. However, earlier investors focused on assessing the risks and benefits of individual securities; they would then select the opportunities for gain with the least amount of risk. Markowitz is considered the father of portfolio theory because he was the first to publish a theory taking into consideration the mathematical aspects of the risk-reward characteristics. Modern portfolio theory covers the effects of diversification when risks are correlated, distinguishes between efficient and inefficient portfolios, and calculates the risk-return of the portfolio as a whole.
Large industrial organizations face the same kind of challenges as fi nancial investors. They have to select which product to invest in to maximize revenues while matching the level of risk and uncertainty that the fi rms are willing to take. Some of the diversification concepts from modern portfolio theory are therefore used in marketing and product management to optimize the balance of products. One of the most renowned techniques, the growth-share matrix, was developed by the Boston Consulting Group to identify where different products in a given portfolio lay over two scales: market growth rate and relative market share (Boston Consulting Group, 1970). The strategy was developed around the idea that cash cows (product with high market share and low growth) would generate sufficient profit to satisfy shareholders, and allow investments in stars (high growth and high market share) and question marks (high growth and low market share) to ensure revenues in the future. This introduced the concept of product portfolio management.
In the 1970s, research and development (R&D) enterprises slowly started to develop different quantitative decision models to support their project selection and resolve the resource allocation between projects to help them in reaching their strategic objectives. However, Baker and Freeland (1975) noted that many of these models were actually ignored in practice. The most prevalent method was still traditional capital budgeting thus ignoring the non-monetary aspects of the projects.
McFarlan (1981) introduced the concept of the selection of information technology (IT) projects and is now considered to be the author who provided some of the basis for the modern field of PPM. He proposes tools to assess the risks of individual projects and portfolios of projects. McFarlan suggested that the IT project risks are based on the “size and structure of the project and the company’s experience with the technology involved” (p. 142). Risk unbalanced portfolios might leave gaps for competition to step in and lead an organization to suffer operational disruptions (DeReyck et al., 2005).
In the mid-1980s and early 1990s, some researchers started to study the project oriented company , defined by Gareis (1989; 2004) as a company that frequently applies projects and programs to perform relatively unique business processes. Some authors prefer to discuss management by projects or multi-project management (Anavi-Isakow & Golany,2003; Blomquist & Wilson, 2004; Cooke-Davies, 2002; Engwall & Sjögren Källqvist, 2001; Fernez-Walch & Triomphe, 2004; Zika-Viktorsson, Sundstrom, & Engwall, 2006).
The main idea is that enterprises not only have to manage single projects successfully to meet competition but also need to manage a large portion of their business through projects.
This can easily be explained by the fact that according to Payne (1995) up to 90 percent of all projects, by value, occur in a multi-project context. Firms have to select and prioritize the right projects in addition to do the projects right (Dinsmore & Cooke-Davies, 2006b). This brought some consensus towards a common understanding and defi nitions of project portfolios and of the project portfolio management processes, which are presented in the upcoming sections.
