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ScienceDirect Procedia - Social and Behavioral Sciences 119 (2014) 85 – 94
27th IPMA World Congress Creating and appropriating value from project management resource assets using an integrated systems approach
Paul D Gardiner* British University in Dubai, DIAC, Dubai, PO Box 345015, United Arab Emirates
Abstract
The aim of the research reported here is to identify and characterise relationships between learning processes, dynamic capabilities, knowledge management and project management resource assets. A micro-practice approach was adopted to identify activity configurations that represent the inflection points of value creation and appropriation in an integrated project management system. The research was based in the UAE and consisted of a literature review and pilot study based on a qualitative research methodology using semi-structured interviews in a variety of private and public sector organisations. A conceptual framework has been developed based on an integrated systems approach that spans project, programme and portfolio management (PPPM) systems. The initial results are promising and demonstrate the increasing importance of tacit knowledge sharing, strategic leadership and HRM practices in project management. The paper lends itself to further enquiry and debate. © Authors. Published Published by byElsevier ElsevierLtd. Ltd.Open access under CC BY-NC-ND license. © 2014 2014 The The Authors. Selection and peer-review Selection peer-review under under responsibility responsibilityofofthe theIPMA. IPMA. Keywords: PPPM system, learning process, strategic leadership, dynamic capabilities, knowledge management, business value
* Corresponding author. Tel.: +971-50-929-9354; fax: +971-4-366-4698. E-mail address:
[email protected]
1877-0428 © 2014 The Authors. Published by Elsevier Ltd. Open access under CC BY-NC-ND license.
Selection and peer-review under responsibility of the IPMA. doi:10.1016/j.sbspro.2014.03.012
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1. Introduction All organisations seek to use and develop their project management resource assets effectively. The role and function of project management in successful organisations has evolved from doing projects right to doing the right projects, and is now focused on the relationship between project management and other knowledge domains, such as strategy, organisation structure and knowledge management. This paper develops a theoretical and conceptual position using the literature from strategy and knowledge management areas as a basis to explore this area further. The research presented is preliminary and based on empirical data from four pilot interviews to provide initial feedback on the efficacy of the conceptual model and research methodology proposed. A recent survey showed that 90% of global senior executives and project management experts say: ‘good project management is key to the delivery of successful results and gaining a competitive edge’ (Economist Intelligence Unit, 2009); however, ‘little research has been done to fully understand how project management contributes to competitive advantage’ and there have been few empirical studies on project management as a strategic asset (DeFillippi and Arthur, 1998; Jugdev, 2004; and Jugdev and Mathur, 2006). Nevertheless, it is accepted that strategic resource assets contribute to a firm’s competitive position and tend to be knowledge-based (Amit and Schoemaker, 1993). 1.1. Research aim and objectives The overarching aim of this research is to explore and understand the mechanism by which project management contributes to sustained organisational performance by studying at a micro-level the influence of dynamic capabilities, knowledge management and learning processes on the PPPM system. The specific objectives of the research are: 1. Model the PPPM system by which project management contributes to sustained organisational performance through the influence of dynamic capabilities, knowledge management and learning processes. 2. Investigate at a micro-level the nature and patterns of influence, i.e. results chains, that dynamic capabilities, knowledge management and learning processes have on activity configurations of PPPM systems. 3. Recommend further research to investigate more fully the above relationships and to evaluate the implications for industry. To fulfil these objectives a relatively new methodological approach in project management is used which: (1) combines dynamic capabilities, knowledge management and learning processes; (2) focuses on the tacit side of knowledge management rather than the more common focus in project management research of explicit knowledge; (3) develops understanding about how projects’ lessons-learned can contribute to knowledge assets in organisations, an area that is till now problematic and under-researched generally. The following sections of this paper present a literature review, conceptual framework and pilot study analysis. A major goal of the paper is to stimulate further debate in the research of these concepts and how they can help organisations to develop excellence in their PPPM systems. 2. Literature review 2.1. Value In 2004, Soderlund published on ‘adding value through project management’ followed in 2006 by research which recognised ‘value creation as the prime focus of projects, programmes and portfolios’ (Winter and Smith, 2006). The concept of project management as a means to add value was also demonstrated by Asad (2012) in a UAE-based study and, elsewhere, Mathur et al (2007) and Killen et al (2012) have published on the competitive value of project management. Value can be expressed and defined in many ways, for example, economic value, ethics, market value, personal value, and functional value in mathematics. This research draws on the concept of business value shaped by the works of Drucker (management by objectives) and Porter (value chain analysis) in which a resource-based view of the firm is argued to provide a balance between the internal and external processes in which a business
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operates (Tywoniak, 2007). These effects are typically moderated by structuration (Giddens, 1984) in which dynamic tensions influence the ability of resource assets to effect their full potential due the restraining effect of structural mechanisms such as, organisation culture, design, norms and various levels of governance. The concept of business value and its appropriation was refined by Barney as a necessary condition for achieving competitive advantage (Barney 1991 and Barney, 2002). In this sense, value creation is seen as part of a team process in which a network or configuration of resources work together and influence each other creating opportunities for synergy rather than a purely mechanistic process. The concept of business value as described above is linked to business strategy (for example, see Kaplan and Norton, 1992 and Wongrassamee et al, 2003) and includes stakeholders in the firm’s value chain as well as the resources directly employed in the organisation. More recently the role of absorptive capacity has been studied in which a firm is able to recognise the value of new information, assimilate it, and apply it to commercial ends (Cohen and Levinthal, 1990) . The concept of business value has also been linked to project success (Gardiner and Stewart, 2000) which in turn has been shown to be influenced by the national culture of the different stakeholders (Ojiako et al, 2012. In the contemporary strategy literature, value is often discussed alongside dynamic capabilities which are considered by many to be prerequisites to achieving sustained competitive advantage in turbulent environments. 2.2. Dynamic capabilities The strategy literature has continued to debate and add to the concept of dynamic capabilities since Teece et al’s landmark publication in 1997. It is not the purpose of this paper to delve deeply into this debate but to suggest extending the application of this theory into the area of project management and PPPM systems more generally, drawing on the recent theoretical position developed by Easterby-Smith and Prieto (2008), which explores possible relationships between dynamic capabilities, knowledge management and learning processes. Easterby-Smith and Prieto were not the first to link together dynamic capabilities and knowledge management: Neilson (2006) argues a theoretical approach which emphases that dynamic capabilities are of little value if the knowledge management activities are not taken into account as well. He proposes that practicing managers struggling with the operationalization of dynamic capabilities should instead focus on the contributing knowledge management activities in order to operationalize and utilize the concept of dynamic capabilities. Easterby-Smith and Prieto (2008) independently argue a similar position and develop their theory by adding the mediating effect of learning capabilities. The operational routines and organisational resources are uniquely related to one another within a specific context. We can use a concept described by Regner (2008) as activity configurations to explain this interrelationship. Activity configurations are interactions of actors or agents in a particular context defined by certain socio-cultural and cognitive contexts and surrounded by certain artifacts (Regner, 2008). In this research, these are represented by project management capabilities and the internal and external context in which they operate. These configurations are further modified by the effects of structuration in which organisation structures can moderate the operationalization of activity configurations due to effects of hierarchy, culture, governance rules etc. Clearly the effects of structuration as described above will also play a part in determining the influence of these activity configurations within projects. These effects have been empirically explored by Eltigani et al (2011) within the research territory of developing new capabilities through the use of excellence models in government organisations in Abu Dhabi. The next section will develop the use of dynamic capabilities and activity configurations in a PPPM context. 2.3. Dynamic capabilities and project management By considering ‘capability’ as potential to do something and not the work done itself (Dougherty, Barnard and Dunne, 2004), project management is considered an organisational capability to do the work of projects, i.e. to get projects done. Increasingly, scholars agree that strategy realisation, and hence innovation, growth and long term sustainability, is achieved through an organisation’s PPPM system (Killen, 2012). Dynamic capabilities, however, reside in the potential to change resources, routines and competences; they reside in the routines rather than in the resources themselves (Teece et al, 1997). This reflects well the function of portfolio management in a PPPM system in which strategic priorities and available resources are continually monitored to ensure that resources
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remain allocated where they are most effective. Typically, this requires a dynamic response to internal and external changes that impact the portfolio and its alignment and potential contribution to strategy. At a structural level, many organisations have set up a PMO to help mediate this (Singh et al, 2009) and to provide learning and excellence processes, including standardisation and institutional consistency. However, there is often a naive tendency, internationally and in the UAE, to assume that creating a PMO is a panacea to solve the issue of getting best value from project management; research and practice (Mustafa, 2013) shows this is not always the case. Finally, Easterby-Smith and Prieto (2008) argue that the process of learning may be a central element in the creation and renewal of dynamic capabilities. Therefore, the examination of the processes by which firms learn is thus critical to understanding dynamic capabilities (Mahoney, 1995; Zollo & Winter, 2002). Easterby-Smith and Prieto (2008) consider three levels of related capability: zero level operational capabilities which get the work done, first level dynamic capabilities which have the ability to reconfigure resources into new operational capabilities, and second level learning capabilities by which an organisation can build new dynamic capabilities and transform itself into a learning organisation. In a PPPM system, we can consider these three levels as follows: (1) zero level PPPM capabilities or routines are represented by the project management practices, i.e. activity configurations of the project management resources shaped by the local context, knowledge of the actors and structuration effects; (2) first order dynamic capabilities dedicated to the modification of PPPM activities and routines, for example the practices within a PMO that shape, modify, tailor and institutionalise the project management practices; and, (3) second order learning capabilities that facilitate the creation and modification of new PPPM dynamic capabilities. These are fundamental organisational processes that enable organisations to learn and may be related to C-level leadership, HRM practices, organisation design, including culture, stakeholder engagement and knowledge management systems. This paper has so far considered the contribution to business value of project management and its role in achieving sustained performance and competitive advantage, followed by an introduction to the theory of dynamic capabilities and how this can be considered within a PPPM system. The next section develops the knowledge management theme and considers its place in the conceptual framework. 2.4. Knowledge management and project management Project management has traditionally been viewed in terms of codified, tangible assets, and most of the project management literature to date has focused on this side of the project management body of knowledge (Ulri and Ulri, 2000; and Kloppenborg and Opfer, 2002), largely ignoring the tacit ‘know-how’ knowledge, so important in value creation and appropriation (Barney, 1991; and Barney, 2002) apart from a few notable exceptions (e.g. Fernie et al, 2003; Green, 2005; and Mathur et al, 2007). It is reported that up to 90% of the value from knowledge is contained in the unexpressed experiences, social processes or tacit knowledge of the project contributors and stakeholders (Smith, 2001). Projects have traditionally included ‘lessons learned’ processes to capture and share knowledge from one project to another. However, this process is still plagued with difficulty; there are fundamental issues within projects that inhibit such learning, such as the temporary nature of project organisations and the fundamental complexity of projects (Williams, 2008; Lindkvist et al.; 1998; Brusoni et al., 1998; Prencipe & Tell 2001). Significant strides have been made in sharing explicit knowledge through project management professional bodies, training organisations and the establishment of project management methodologies that are shared institutionally and which are regularly improved or updated –e.g. through revisions and updates of the various published PM bodies of knowledge or a formal methodology such as PRINCE2. This learning process can be ad hoc or planned, structured and measured using one of the project management maturity models widely available. Pilot interviews conducted in this research reveal that in many cases, practitioners continue to struggle to mine, use and benefit from the rich vein of value held in the lessons learned from projects (GAO, 2002; Williams, 2007; Williams, 2008, Fuller, 2011, Williams, 2004, Butler, 2012). Building on the above work and taking into consideration relevant strategy literature as advised by Killen (2012), e.g. Hamel and Prahalad (1990), and recent research on the role of the PMO, e.g. Michael (2009) and Rose (2011), this research seeks to identify how organisations in the UAE use different combinations of capabilities (e.g. leadership, knowledge management, innovation) in project management situations represented by unique activity configurations (the operational capabilities) that combine explicit and tacit knowledge, to add business value. By
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using an appropriate research methodology that focuses on micro-level practices (Eltigani et al, 2011), it is argued that the research can determine the critical points of inflection where step increases in value can occur within the three-levels of capability framework proposed by Easterby-Smith and Prieto (2008). 3. Conceptual framework As mentioned above, this research is based on a conceptual framework that is a modification of the framework by Easterby-Smith and Prieto (2008) - see Figure 1.
Figure 1: Conceptual framework, modified from Easterby-Smith and Prieto (2008) There are two fundamental systems influencing the project management system: (1) the three levels of related capability discussed above which include operational routines, dynamic capabilities, knowledge management and learning processes, and (2) the PPPM system in the organisation which can be studied as an integrated system containing all the elements mentioned in (1) embedded in the organisation and which collectively operate to maintain sustained performance and competitive advantage. 4. Methodology and data collection This research seeks to better understand the mechanisms that shape PPPM capabilities in functional, semiprojectised and projectised organisations. Several research instruments are available in the knowledge management literature, while dynamic capabilities have yet received limited empirical verification (Easterby-Smith and Prieto, 2008). However, research by Eltigani et al (2011) has demonstrated the use of dynamic capabilities to show how organisations in the UAE have used the Excellence model to generate new capabilities and improve performance. The moderating effect of structuration is also considered by Eltigani et al (2011) and Eltigani (2013) and will also be considered in this research in stage two. The main unit of analysis is the process of formation of activity configurations in PPPM systems that have been influenced by the wider organisational context. This involves collective activities, including diverse actors from within, and external to, the organisation drawn from the prevailing social structure. Stage one of the research, reported here, is based on preliminary interviews with senior PPPM managers across a spectrum of industries. Stage two of the data collection will be with a wider group of people in the organisations targeted, including quality managers, experts, functional managers, C-level executives and others that interface with identified dynamic capabilities and the prevailing knowledge management system.
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5. Pilot study results The pilot data has been collected in the UAE from organisations in the oil and gas, telecommunications, engineering and real estate sectors. The pilot study involved 4 interviews in different organisations as explained above using a semi-structured questionnaire to explore at a low or micro-level the main areas in the conceptual framework. The interviewees were encouraged to explore how project management practices evolve and improve, followed by requests for real examples and probing into how these examples came about, e.g. by chance or through some other process operating in the background. In this way, the three levels of capability could be explored without requiring the interviewer to be aware of each level; as far as they were concerned they were just explaining the practices relating to project management and the various influences, moderators and mediators on them. Pilot study organisations: A. Aviation industry, responsible for design and construction of megaprojects in the aviation industry, opeatin gin UAE and internationally. B. Telecommunications, responsible for networks and services across national territories, involved in product and service development, strategic projects and operational rollout projects. C. SME real estate turnkey consultancy, involved in niche market in middle east, typically involving high risk ventures that other companies choos not to compete for. D. National oil and gas company operating in UAE and other Arab nations. The four interviews resulted in about 3.5 hours of recorded interview data which has been transcribed and analysed manually. In stage two of the research, data coding and analysis software will be used. For the purpose of this paper, the results are presented as a series of recounted practices that show relationships between the variables discussed earlier in the conceptual framework. Some remaining challenges are also described that have not been resolved yet: these can be further explored using the conceptual framework in stage two. These practices are summarised from the verbatim transcripts for brevity a shown in Table 1. Table 1. Examples of results chains based on the conceptual framework and empirical pilot study data Org
The organisational learning process and how it was invoked
Existing or new dynamic capability or knowledge management practice
PPPM system capability based on new activity configuration
Ongoing challenges
A
Strategic response to a major negative financial event linked to an internal process and massive rework on high quality architectural finishes.
Triggered the creation of a new organisation-wide knowledge management system.
New capabilities emerged based on projects’ lessons learned and leading to actions: process modifications, redesigns and additions.
To keep the learnings up to date and responsive to changing market trends as they happen.
B
Strategic response to an increase in the number of internal cross functional strategic projects.
Creation of a corporate PMO which has informal mentoring and coaching relationships with the line function project managers, deliberately leaving accountability for their work in the line organisation.
New capabilities formed by influencing project managers, showing how project management adds value, helping them solve their own problems.
To increase awareness of the new capabilities and get buy-in from more project managers who are based in line organisations.
A
Strategic response to market volatility.
HRM practices directed at staff retention and motivation, e.g. team recognition, bonuses, financial motivation, internal recognition, freedom to act and be innovative.
Because recognition is linked to performance it encourages positive practices and sharing - best people are rewarded and stay, those who do not perform tend to leave.
To identify and reward the ‘enablers’; to encourage the ‘disenablers’ to move on.
B
Strategic response to what is happening in the market.
Focus groups, hiring experienced personal from other markets, partnerships with vendors and suppliers – we spend real money on that, plus classroom based learning.
People learn new capabilities relevant to our culture and national context and which are based on current market needs.
Keeping ahead of the game in terms of market trends and fashions.
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C
Strategic response to market needs in our specific niche market which is high risk
Tap into tacit knowledge that comes from our outsource partners – most business operations are outsourced – we provide financial incentives and a stake of the business to them.
They buy into the business model and share tacit knowledge openly to ensure the business works – we learn from this and develop new capabilities relevant to our projects
Maintaining the balance between reward given and knowledge obtained.
C
Strategic response to a major negative financial event linked to an internal process and resulting in project abandonment and major losses
Knowledge management processes ensure key learnings are captured and actioned to form new processes.
Dealing with external entities from different countries –learned not to believe what they say even from top officials, ambassadors and ministers –if not on paper it’s worth nothing.
Learning ‘the hard way’ is a powerful lesson; the challenge is to see it coming.
B
Corporate PMO response to changing organisation structure
CPMO modifies and adjusts the project management methodology which originated as an off-the-shelf method
Project managers learn new capabilities underpinned by the evolving method in the company delivered though mentoring and in house training.
How to increase the percentage of project managers who use the method.
D
Corporate PMO response to increasing numbers of cross-functional projects
CPMO started to outsource project management
Brought in new capabilities which got up to speed within 4 to 6 weeks; added bonus was they came with new knowledge about project management processes and willing to share
Tapping in to the tacit knowledge available from the outsourced project managers.
D
Strategic response by CPMO to increasing volume of cross functional projects.
CPMO director enhances knowledge management in the business unit by bringing in external experts for events and knowledge sharing.
Knowledge from experts is shared and seen to reflect other knowledge in the company, re-enforcing its validity so that more project managers take notice.
A
Strategic response to a shock where contractor claimed for a lot of money
Senior managers set up operational readiness processes and now educate contractors about it.
New processes, reduces operational risks after project completion where everyone blames each other if a fault occurs
How to improve and optimise.
6. Discussion Project management research has refocused itself in recent years to incorporate multidimensional measures of project success, business results and benefit management, networking and alliances, strategy implementation and the effects of national culture. There is a growing realization that project management excellence lies beyond the espoused bodies of knowledge produced and managed by the PMI, APM and IPMA among others and the ‘knowwhat’ knowledge domains they represent and that it must now consider the tacit or ‘know-how’ knowledge as part of its value-added processes. This research has drawn from research literature in PPPM, dynamic capabilities and knowledge management to suggest a framework in which activity configurations or ‘value steps’ can create opportunities to add new business value. From this research, organisations can understand how the various ways in which they configure their project management resource assets can add value from simple projects to megaprojects, for example, by integrating complementary practices such as cost reduction, project management training, leadership development, knowledge management and building innovation capacity. The preliminary results from the pilot study show reasonable alignment with the proposed conceptual framework. Table 1 shows a series of results chains in which a learning response gives rise to a new dynamic capability which in turn spawns one or more activity configurations that add new PPPM capabilities. As these capabilities are embedded in the social, political and cultural environment in which the organisation unit is based, this makes them difficult to imitate, and so more likely to give competitive advantage. This augurs well for future studies to explore this area more fully. The resulting framework of activity configurations can be used by UAE organisations to plan and optimize their project management resource assets which in turn will contribute to overall business efficiency. This research also aligns with current UAE government priority areas aimed at creating ‘a dynamic open economy’ and ‘economic development’ (Abu Dhabi Economic Vision 2030). The research is aimed at helping UAE organisations, and give food for thought to other organisations, to develop their project management assets objectively as part of an integrated system focused on increasing value and competitive advantage.
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Research challenges
1.
2.
3.
Key research challenges identified during this pilot study include: Access to data and its collection. This is a challenge for any research project that looks deep into an organisation and its practices, successes and failures. The phenomena of the study, dynamic capabilities, knowledge management, learning processes and the PPPM system, are all connected to organisational sustained performance and as such this carries with it challenges for access. This challenge was addressed by the nature of the existing collaborative relationship with all case study organisations. It is also significant that the main contact in each organisation was a senior executive. Complexity of the research. The theoretical constructs on which the research is based are relatively complex in terms of the context and the phenomena under consideration. There are resulting challenges encompassed in this complexity for the conduct of the research project. These were largely addressed by using an appropriate methodology that combined exploratory, phenomenological and constructivism aspects through a micropractice lens approach. Cultural barriers. Cultural barriers can create tremendous difficulties in complex projects. Although limited to a pilot study at this stage, this research was complex in that it dealt with data that not everyone was comfortable sharing. This is also a well-reported challenge of lessons learned information systems. For example, the lessons learned information system at NASA has been criticised as ineffective due to predominantly cultural barriers to lessons learning (GAO, 2002). The key challenges reported there were: • lack of time to capture or submit lessons and a perception of intolerance for mistakes. • reluctance to share negative lessons for fear that they might not be viewed as good project managers. One manager stated, “Until we can adopt a culture that admits frankly to what really worked and didn’t work, I find many of these tools to be suspect.” Managers suggested that NASA could improve lessons learning by implementing mentoring and “storytelling” activities.
These were addressed as far as possible by the methodology used and ethical standards applied which included confidentiality and anonymity of respondents. Conclusion This paper presented a literature review and preliminary investigation using theories from the strategy and knowledge management literature applied to a PPPM context to explore the relationship between the variables that influence business value and competitive advantage. Based on the results achieved so far, it is tentatively suggested that organisations should seek to understand further how dynamic capabilities, learning processes and knowledge management interact in ways to configure and reconfigure their project management resource assets to add additional business value from simple projects to megaprojects. In this way, future research can be aimed at understanding the increasing importance of tacit knowledge sharing in project management, for example, through leadership, innovation, HRM and knowledge management practices. The research was conducted in the United Arab Emirates, though it is expected that some generalisations of the findings will be possible. 3.0 References Amit, R. and Schoemaker, P.J.H. (1993). ‘Strategic assets and organizational rent’, Strategic Management Journal, 14, 33-46. Asad, F. (2012). 'Exploring the value of project management: linking project management performance and project success', unpublished dissertation, Faculty of Business, British University in Dubai, Dubai. Barney, J.B. (1991). ‘Firm resources and sustained competitive advantage’, Journal of Management, 17, 99-20. Barney, J.B. (2002). Gaining and Sustaining Competitive Advantage, Prentice-Hall, Inc., Upper Saddle River, New Jersey. Brusoni, S., Prencipe, A., Salter, A., 1998. Mapping and measuring innovation in project-based firms, CoPS Working Paper No. 46, SPRU, University of Sussex.
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