Business Case Control in Project Portfolios—An Empirical Investigation of Performance Consequences and Moderating Effects

Practitioners place strong emphasis on business cases with the expectation that using business cases to inform and drive investment decisions will assist in creating value from those investments. Maximizing the value generated by project investments is a central aim of the project portfolio management, and the business case provides the underlying rationale for the evaluation of the value created in each project. However, research regarding the use of business cases at a project portfolio level is scarce, and there is a little guidance for portfolio managers on when and how to control the business cases. We identify three elements of a business case control at the portfolio level-the initial review, the ongoing monitoring during the project execution, and the postproject tracking until the business case is realized-and investigate the relationship between business case control and project portfolio success. Furthermore, we analyze enablers and contingencies for the application of the business case control. Based on a cross-industry sample of 183 firms, we find that the business case control is positively related to the project portfolio success. Accountability for business case realization and corresponding incentive systems increase this positive effect. Finally, we show that the portfolio complexity also positively moderates the relationship.

[1]  H. Gemünden,et al.  Formalization of project portfolio management: The moderating role of project portfolio complexity , 2012 .

[2]  Dov Dvir,et al.  Transferring projects to their final users: The effect of planning and preparations for commissioning on project success , 2005 .

[3]  Maximilian von Zedtwitz,et al.  Post-project reviews in R&D , 2003 .

[4]  E. Deci,et al.  A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. , 1999, Psychological bulletin.

[5]  Mha Martien Hendriks,et al.  Human resource allocation in a multi-project R&D environment , 1999 .

[6]  H. Gemünden,et al.  Corporate Innovation Culture and Dimensions of Project Portfolio Success: The Moderating Role of National Culture , 2014 .

[7]  Pwg Morris,et al.  Moving from Corporate Strategy to Project Strategy , 2005 .

[8]  Rainer Seidel,et al.  A project contingency framework based on uncertainty and its consequences , 2010 .

[9]  Alexander Kock,et al.  Behavior of internal stakeholders in project portfolio management and its impact on success , 2013 .

[10]  A. Bubshait.  Incentive/disincentive contracts and its effects on industrial projects , 2003 .

[11]  Xianhai Meng,et al.  The impact of incentive mechanisms on project performance , 2012 .

[12]  Jonas Söderlund,et al.  HRM and Project Intensification in R&D-Based Companies: A Study of Volvo Car Corporation and AstraZeneca , 2006 .

[13]  A. Shenhar,et al.  Project success: a multidimensional, strategic concept , 1997, Innovation in Technology Management. The Key to Global Leadership. PICMET '97.

[14]  J. Busby,et al.  An Assessment of Post-Project Reviews , 1999 .

[15]  Stephen Jenner,et al.  Transforming Government and Public Services: Realising Benefits through Project Portfolio Management , 2010 .

[16]  H. Gemünden,et al.  Risk Management in Project Portfolios is More than Managing Project Risks: A Contingency Perspective on Risk Management , 2014 .

[17]  Peter W. G. Morris,et al.  Reconstructing Project Management: Morris/Reconstructing Project Management , 2013 .

[18]  E. Carayannis,et al.  Post-project reviews as a key project management competence , 2008 .

[19]  A. Prencipe,et al.  Inter-project learning: processes and outcomes of knowledge codification in project-based firms , 2001 .

[20]  Perttu Dietrich,et al.  Successful management of strategic intentions through multiple projects ¿ Reflections from empirical study , 2005 .

[21]  Mats Engwall,et al.  The resource allocation syndrome: the prime challenge of multi-project management? , 2003 .

[22]  Sarv Devaraj,et al.  An empirical comparison of statistical construct validation approaches , 2001, IEEE Trans. Engineering Management.

[23]  Alexander Kock,et al.  An empirical investigation on how portfolio risk management influences project portfolio success , 2013 .

[24]  H. Gemünden,et al.  Enforcing strategic fit of project portfolios by project termination: An empirical study on senior management involvement , 2012 .

[25]  H. Gemünden,et al.  How Ideation Portfolio Management Influences Front-End Success , 2015 .

[26]  K. Narasimhan,et al.  Benefit Realisation Management: A Practical Guide to Achieving Benefits through Change , 2007 .

[27]  M. Martinsuo,et al.  Role of single-project management in achieving portfolio management efficiency , 2007 .

[28]  Scott B. MacKenzie,et al.  Common method biases in behavioral research: a critical review of the literature and recommended remedies. , 2003, The Journal of applied psychology.

[29]  R. Cooper,et al.  New Product Portfolio Management : Practices and Performance , 1999 .

[30]  Fereidoun Ghasemzadeh,et al.  An integrated framework for project portfolio selection , 1999 .

[31]  A. Falk,et al.  The hidden costs of control , 2006 .

[32]  R. Cooper,et al.  Portfolio management for new product development: results of an industry practices study , 2001 .

[33]  Robert G. Cooper,et al.  Portfolio Management for New Products (Управление портфелем новых продуктов) , 1998 .

[34]  Roger Atkinson,et al.  Project management: cost, time and quality, two best guesses and a phenomenon, its time to accept other success criteria , 1999 .

[35]  Kishore Sengupta,et al.  The effect of reward structures on allocating shared staff resources among interdependent software projects: an experimental investigation , 1994 .

[36]  J. Sinacore.  Multiple regression: Testing and interpreting interactions , 1993 .

[37]  W. Ouchi.  The Relationship Between Organizational Structure and Organizational Control. , 1977 .

[38]  P. Eskerod,et al.  Project portfolio management - There's more to it than what management enacts , 2008 .

[39]  Thomas Brambor,et al.  Understanding Interaction Models: Improving Empirical Analyses , 2006, Political Analysis.

[40]  Hans-Georg Gemünden,et al.  Predicting Project Portfolio Success by Measuring Management Quality—A Longitudinal Study , 2013, IEEE Transactions on Engineering Management.

[41]  V. G. Ouchi,et al.  A conceptual framework for the design and organizational control mechanisms , 1979 .

[42]  Mha Martien Hendriks,et al.  Human resource allocation in a multiproject R&D environment : resource capacity allocation and project portfolio planning in science , 1999 .

[43]  R. Müller,et al.  Project Portfolio Control and Portfolio Management Performance in Different Contexts , 2008 .

[44]  B. Frey,et al.  Motivation Crowding Theory: A Survey of Empirical Evidence , 2000 .

[45]  R. Ryan Nelson,et al.  IT Project Management: Infamous Failures, Classic Mistakes, and Best Practices , 2007, MIS Q. Executive.

[46]  M. Martinsuo,et al.  Value Management in Project Portfolios: Identifying and Assessing Strategic Value , 2014 .

[47]  Martin Voss,et al.  Impact of Relationship Value on Project Portfolio Success - Investigating the Moderating Effects of Portfolio Characteristics and External Turbulence , 2013 .

[48]  Henry L. Tosi,et al.  Disaggregating The Agency Contract: The Effects Of Monitoring, Incentive Alignment, And Term In Office On Agent Decision Making , 1997 .

[49]  U. Gneezy,et al.  Journal of Economic Perspectives—Volume 25, Number 4—Fall 2011—Pages 191–210 When and Why Incentives (Don’t) Work to Modify Behavior , 2022 .

[50]  Mona V. Makhija,et al.  The Role Of Organizational Controls In Managing Knowledge , 2006 .

[51]  Scott J. Edgett.  Portfolio Management for Product Innovation , 2013 .

[52]  Dov Dvir,et al.  An Alternative Taxonomy of Project Management Structures: Linking Project Management Structures and Project Success , 2010, IEEE Transactions on Engineering Management.

[53]  Albert L. Lederer,et al.  The role of monitoring and shirking in information systems project management , 2010 .

[54]  Michael J. Shaw,et al.  Portfolio Selection Model for Enhancing Information Technology Synergy , 2013, IEEE Transactions on Engineering Management.

[55]  Scott E. Fricke,et al.  Managing multiple engineering projects in a manufacturing support environment , 2000, IEEE Trans. Engineering Management.

[56]  K. Eisenhardt.  Agency Theory: An Assessment and Review , 1989 .

[57]  Martin J. Eppler,et al.  Harvesting project knowledge: a review of project learning methods and success factors , 2003 .

[58]  Karlos Artto,et al.  Problems in managing internal development projects in multi-project environments , 2003 .

[59]  John M. Ward,et al.  Building Better Business Cases for IT Investments , 2008, MIS Q. Executive.

[60]  C. Ashurst,et al.  Exploring Business Transformation: The Challenges of Developing a Benefits Realization Capability , 2010 .

[61]  Werner G. Meyer.  The Effect of Optimism Bias on the Decision to Terminate Failing Projects , 2014 .

[62]  D. Jonas.  Empowering project portfolio managers: How management involvement impacts project portfolio management performance , 2010 .

[63]  P. Bentler,et al.  Fit indices in covariance structure modeling : Sensitivity to underparameterized model misspecification , 1998 .

[64]  Peerasit Patanakul,et al.  Key Drivers of Effectiveness in Managing a Group of Multiple Projects , 2013, IEEE Transactions on Engineering Management.

[65]  Ulrike de Brentani,et al.  How Formal Control Influences Decision‐Making Clarity and Innovation Performance , 2013 .

[66]  Gerald Bradley,et al.  Benefit Realisation Management: A Practical Guide to Achieving Benefits Through Change , 2006 .

[67]  Darren Dalcher Pmp.  Project Management for the Creation of Organisational Value , 2012 .

[68]  David J. Edwards,et al.  Moving Beyond Optimism Bias and Strategic Misrepresentation: An Explanation for Social Infrastructure Project Cost Overruns , 2012, IEEE Transactions on Engineering Management.

[69]  Sascha Meskendahl.  The influence of business strategy on project portfolio management and its success — A conceptual framework , 2010 .

[70]  Jonas Söderlund,et al.  Human resource management in project-based organizations : the HR quadriad framework , 2011 .

[71]  Richard Breese,et al.  Benefits realisation management: panacea or false dawn? , 2012 .

[72]  Bent Flyvbjerg,et al.  Curbing Optimism Bias and Strategic Misrepresentation in Planning: Reference Class Forecasting in Practice , 2008 .

[73]  Colin Ashurst,et al.  Improving the impact of IT development projects: the benefits realization capability model , 2008, Eur. J. Inf. Syst..

[74]  Rajesh Sethi,et al.  Stage-Gate Controls, Learning Failure, and Adverse Effect on Novel New Products , 2008 .

[75]  Kevin P. Grant,et al.  Project management maturity: an assessment of project management capabilities among and between selected industries , 2006, IEEE Transactions on Engineering Management.

[76]  T. Laine,et al.  Management Control of Project Portfolio Uncertainty: A Managerial Role Perspective , 2014 .

[77]  Peter W. G. Morris,et al.  Reconstructing Project Management , 2013 .

[78]  Robert A Hunt,et al.  Project portfolio management for product innovation , 2008 .

[79]  M. Zedtwitz.  Organizational Learning through Post-project Reviews in R&D , 2002 .

[80]  J. Smyrk.  A General Framework for Gauging the Performance of Initiatives to Enhance Organizational Value , 2012 .

[81]  P. Gardiner,et al.  Revisiting the golden triangle of cost, time and quality: the role of NPV in project control, success and failure , 2000 .

[82]  Dov Dvir,et al.  Plans are nothing, changing plans is everything: the impact of changes on project success , 2004 .