Project Portfolio Management is the bridge between project management and organizational imperatives such as sustainability. When managers use strategic objectives as the basis for determining which projects are selected and given priority, the end result is that only those projects that move them toward these long-term goals will be undertaken. Integrating the principles of sustainability in the project charter will help define the result, objective, conditions, and success factors of the project.
Incorporating sustainability will change the evaluation of progress and alignment with strategic orientation. As project managers, we are accustomed to building or accepting a financial business case to justify a project; however, we also need to incorporate non-financial factors that substantiate the project's long-term economic, social, and environmental impacts. It is the project manager who should be a leader in translating the goals of the organization into a project outcome that effectively and efficiently meets the goals of the organization and the broad set of project stakeholders Mochal, Stakeholders are persons or organizations e.
Project managers have traditionally had a narrow view of stakeholders, looking primarily at those within the organization who are most directly impacted by the activities of a project, such as team members, customers, and the sponsor. Stakeholders bear power and influence over the project, how it is formed, how problems are solved, and the end result of the project.
Stakeholders who are located outside of the company, who represent community, social, or environmental interests, have very little direct power, so it is incumbent on the project manager to carefully identify the salient interests that should be incorporated into project stakeholders.
Supporting the principles of sustainability—balancing social, environmental and economical interests, both short term and long term and both local and global—will increase the number of stakeholders of the project. In order to perform the project successfully, the project manager needs to acquire the buy-in of the stakeholders. This means the project manager must have conceptual and operational knowledge about the knowledge domains of the now extended stakeholders group Silvius, no date.
The project manager also benefits from this direct engagement, because he or she gains powerful expertise outside his or her traditional domain, which strengthens not just the project, but also his or her firm as a whole. Those are all still big parts of the equation, but they're maybe half of the equation. The other half is about communities and stakeholders. What are the needs of communities where you want to work? What do they think and how involved are they? I'm going to do it the right way.
Make me part of this.
I'm going to be part of these decisions going forward. It changes the way we think as a company. It raises our performance. And it changes the timeline of these projects.
We could shift to sustainability and save $26 trillion. Why aren’t we doing it?
It certainly covers the financial issues. But fully half of that proposal deals with what I would call the nontechnical risk. The social performance, the sustainability issues: How have those been taken into account? What are the headline issues? How are we dealing with them? How will we mitigate the risk associated with those? What's the cost of tha, and how long does that take? Careful identification and management of stakeholders are critical to developing a sustainable project structure and culture, as all decisions flow from there.
The project's success is directly influenced by the care taken in capturing and managing project and product requirements. As project managers improve the competencies, team interaction, and the overall team environment to enhance project performance, they also need to look at the broader picture—to look beyond the artificial barriers of the project itself and evaluate human resource implications in the larger community and over the life cycle of the product that the project is creating.
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Human resource elements already tend to get short attention from project managers, partially because most project teams are in a matrix environment, where team members do not report directly to the project manager. So the project manager primarily addresses human resource management via team building, recognition and rewards, and occasionally, professional development of team members.
However, a longer-term, sustainable focus requires the project manager to address these elements for project team members:. That's a lot to put on one project manager, and much of it is outside the project manager's direct control, but not outside of his or her influence. By being aware of these issues, he or she can raise them directly to line management, or address them as he or she is able to within the confines of the project. However, his or her responsibility doesn't stop there. There are also human resource management issues for the broader stakeholder community. The organization can't claim to have a sustainability focus if vendors and suppliers do not uphold the same principles in raw material development that the purchasing organization follows.
Project Procurement Management includes the contract management and change control processes required to develop and administer contracts or purchase orders issued by authorized project team members PMI, , p. However, evaluation doesn't stop there. In , Walmart's house brand division piloted seven existing products, asking suppliers to assess those products on four dimensions of sustainability: resource use, including non-renewables; impact on climate change; impact on ecosystems throughout the product's supply chain; and impact on human health Goleman, That pilot has now been extended to more than , global suppliers, as a key step toward enhancing transparency in the supply chain.
The goal is to eventually offer this data to customers to aid in purchasing decisions. Project managers are advised that the complexity and level of detail of the procurement documents should be consistent with the value of, and risks associated with, the planned procurement PMI, , p. Project managers are accustomed to factoring risk into procurement documents and using those documents to transfer risk to the seller, or otherwise manage risk.
However, those risks have traditionally been limited to risks to the project itself, and its constraints of schedule, cost, and scope. If an organization is moving toward a sustainable, long-term view of its business, it makes sense that those values be reflected in procurement contracts as well, in areas such as bribery, child labor, and similar factors that could pose risk to the firm as a whole.
Operationally, organizations tend to look at waste reduction as a solitary activity.
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However, it's only when it's integrated into the organization, and throughout project management, that the organization begins to look at the entire supply and value chain—to reduce the amount purchased in order to reduce the amount wasted. As traditionally defined, risk is an uncertain event or condition that, if it occurs, has an effect on at least one project objective: scope, schedule, cost, or quality. Risks arising from environmental problems or social discontent surrounding a project can be extremely costly in terms of delays and stoppages, negative publicity, threats to operating license, and significant unforeseen expenditures.
At the same time, reputational damage to a company can far exceed the immediate cost impacts of a single project. In much the same way that other categories of risk management can't be prescriptive across industries, sustainability risks can vary significantly. Different core subjects and issues apply to different projects and industries. For example, extractive industries may have more environmental risks, whereas textile firms have more risks in terms of social sustainability.
To evaluate what's at stake, companies must scan the whole value chain, looking, for example, at the way they source raw materials and make and sell their products. In terms of addressing sustainability risk, companies move from blind spots, to awareness, to compliance, to transparency Werbach, , p. Many firms are satisfied with just being compliant with laws or regulation, but compelling people to comply with rules is the lowest level of engagement.
Compliance implies that a company is meeting base standards, not raising the bar for competitors, and certainly not improving the lives of stakeholders. There is a huge difference between avoiding the bad and driving toward the good. Increasingly, a company's sources of long-term value are affected by a rising tide of expectations among stakeholders about the societal role of business.
The public understandably has a right to expect business to discharge its functions honorably within the social framework and play a conscientious role that commends it to public trust. The company that has not invested in building a positive reputation through sustainability is susceptible to being damaged when negative stories appear, because there is not a positive correlation in the consumer's mind to balance out the negative impacts of bad news.
The challenge is to find a way for companies to incorporate an awareness of sociopolitical issues more systematically into their core strategic decision-making processes.
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Companies must see the social and political dimensions not just as risks—areas for damage limitation—but also as opportunities. They should scan the horizon for emerging trends and integrate their responses across the organization, so that the resulting initiatives are coherent rather than piecemeal Bonini, In this way, the risk management process informs portfolio management and the overall strategic plan.
Project Communications Management includes the processes required to ensure timely and appropriate generation, collection, distribution, storage, retrieval, and ultimate disposition of project information. Project managers spend the majority of their time communicating with team members and other project stakeholders. Effective communication creates a bridge between diverse stakeholders involved in a project, connecting various cultural and organizational backgrounds, different levels of expertise, and various perspectives and interests in the project execution or outcome PMI, , p.
Communications, encompassing project reporting, presentation, records, and lessons learned, will ensure that the project stakeholders are informed about the sustainability aspects of the project. These concerns need to be uncovered and discussed, and the risks need to be assessed. The resolution may result in a change request or may be addressed outside of the project, for example, postponed for another project or phase or deferred to another organizational entity.
Business leaders must become involved in socio-political debates not only because their companies have so much to add, but also because they have a strategic interest in doing so. Social and political forces, after all, can alter an industry's strategic landscape fundamentally; they can torpedo the reputations of businesses that have been caught unaware and are seen as being culpable; and they can create valuable market opportunities by highlighting unmet social needs and new consumer preferences Bonini, For too long, project management has operated independently of its broader business context.
Only focused on tactical execution, project managers evaluated their initiatives as if they had no life outside their defined beginning and end. This has limited the career development of project managers, as well as job satisfaction. Similarly, companies also operated like islands. Ignoring negative externalities costs borne by society at large for its actions , organizations relentlessly pursued shareholder value, at the expense of stakeholder interests. Project managers must align their projects with organizational strategy, and organizational strategy has changed to encompass the interests of the broader stakeholder community.
It never works out in the long run. So you have to do this work up front.
Issues, Concepts and Applications for Sustainability
What I have to do as a company leader is push the education and the thinking of our project managers, our project developers, in that direction. And all of that will continue to improve over time. This change will be catalytic. Balestrero, G. Draft document, unpublished.
Barton, D. Capitalism for the long term. Harvard Business Review March issue. Berns, M. Winter, Bonini, S.