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Keywords:

  • project portfolio management;
  • uncertainty;
  • managerial roles;
  • management control systems;
  • product development

ABSTRACT

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

This article presents empirical results on different managers’ viewpoints regarding the sources and management of project portfolio uncertainty. As a key result, this study demonstrates the versatility of uncertainties experienced by managers, the limited degree of perceived control over them, the use of an almost complete management control package in managing uncertainties, and the necessity of managers’ cooperation in the skilled use of the management control package when managing uncertainties. In addition, a further research agenda is proposed.


INTRODUCTION

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

In their product development, large companies have adopted project portfolio management (PPM) as a means for prioritizing and selecting product development projects among various options as well as allocating resources with the value maximization, balance, and strategic alignment of the portfolio in mind (Cooper, Edgett, & Kleinschmidt, 1997). Project portfolios, however, are challenged by different uncertainties that require managers to continually monitor, capture, and use relevant information to keep their portfolios responsive to the dynamic environment (Petit & Hobbs, 2010). Here, project portfolio uncertainties are defined as changes and developments in single projects, in the portfolio of projects, in the organization itself, or its environment, in which the outcome or the probability of some changes is not fully known (Knight, 2006, pp 19–20). We see uncertainty as a lack of information considering performing certain tasks (Galbraith, 1973, p. 5), a long time span of definitive feedback (Lawrence & Lorsch, 1967), and an overall lack of goal or causality information (Thompson & Tuden, 1959). If project portfolio uncertainties are not managed, the result might be either inadequate utilization of positive developments or inadequate shielding from negative ones. Sources of uncertainty and their management have increasingly become a concern for PPM, in managerial practice and in research (Martinsuo, 2013; Petit & Hobbs, 2010). Less is known, however, about individual managers’ perceptions on uncertainties, their span and means of control over the uncertainties, and how the company-level pattern for managing uncertainties in the product development portfolio is constituted. Altogether, there is inadequate knowledge of the sources of project portfolio uncertainty and the means to manage those uncertainties—with “situated actions” (Jerbrant & Gustavsson, 2013, p. 167).

The literature on project portfolios is largely based on studies of research and development (R&D) (Blomquist & Müller, 2006, p. 53), where uncertainty can be reduced by using management control systems for producing information about uncertain business phenomena (Davila, 2000). In practice, in every company there is some sort of a management control system, be it formal or informal and these systems also entail PPM activities. In particular, management control systems operate within organizational action—also PPM—and control mechanisms fall into categories of culture, planning, administration, budgets, as well as measurement systems and rewards (Malmi & Brown, 2008). These different types of controls correspond to the contemporary—yet underemphasized—views of project portfolio uncertainty management as not only a venue for rational, but also for structural and political human behavior (Geraldi, 2008; Martinsuo, 2013).

The possible unpredictability of human behavior makes PPM responsive to subjectivity. Indeed, previous research acknowledges that portfolio decisions may be affected by managers’ subjective viewpoints (e.g., Blichfeldt & Eskerod, 2008; Loch, 2000), managers’ cognitive and leadership styles (McNally, Durmusoglu, Calantone, & Harmancioglu, 2009), and the negotiations and bargaining taking place among management team members (Christiansen & Varnes, 2008). Senior and middle managers with different responsibilities in PPM, such as those of project, program, portfolio, line or general management (Beringer, Jonas, & Kock, 2013; Blomquist & Müller, 2006; Jerbrant & Gustavsson, 2013), may perceive project portfolio uncertainties differently due to their individual organizational positions, characteristic mindsets, and personal worldviews (Duncan, 1972). Previous empirical research, however, has not yet explored different managerial roles in managing uncertainty in project portfolios, although there have been conceptual attempts to sort out different managerial roles in PPM (e.g., Jonas, 2010). As a result, there is a lack of guidance on how managers could organize and divide project portfolio uncertainty management responsibilities.

Altogether, there is still room for analysis of (1) the sources of uncertainty and (2) management control as a means to manage uncertainty in PPM. Moreover, both of these analyses could benefit from taking the point of view of different managerial roles in PPM; thereby, we pose the following research questions:

  1. How do managers in different roles perceive project portfolio uncertainties?
  2. How do managers in different roles perceive management controls as means to managing project portfolio uncertainties?

Our research data consist of interviews from six machinery manufacturing companies in Finland. We inter-viewed managers in the positions of a product manager, business controller, R&D director, and project manager in order to acquire multi-perspective data from portfolio, program, and project management roles (following Blomquist & Müller, 2006). With this empirical setting, we try to avoid the single informant bias mentioned, for example, by Teller (2013, p. 48) who promoted examining portfolio-level risks by analyzing project and portfolio managers; we also include stakeholders from outside the project management office (Jerbrant & Gustavsson, 2013); in other words, from business and financial management (Rabino, 2001). We contribute to the PPM literature by highlighting the variety of managers relevant to identifying and managing uncertainty stemming from the environment, organi-zational complexity, and single projects, with the help of management control systems.

The Sources of Uncertainty in Project Portfolio Management

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

Recent research has acknowledged the need to take into account the context-dependence of PPM (Martinsuo, 2013). Petit and Hobbs (2010), for example, have called for more knowledge on how the dynamics in project portfolio environments should be considered when managing the portfolio. Different risks, changes, deviations, and unexpected events create unavoidable uncertainty that will demand managerial responses, which are not yet sufficiently defined in PPM standards (Petit & Hobbs, 2010).

Project and portfolio managers experience uncertainty stemming from various sources in the context of the portfolio, and such sources have been mapped in different ways in previous research. A majority of the research has centered on uncertainty stemming from organizational complexity (i.e., portfolio complexity in terms of size and interdependencies) (Teller, Unger, Kock, & Gemünden, 2012; Unger, Kock, Gemünden, & Jonas, 2012; Voss & Kock, 2013; Zika-Viktorsson, Sundström, & Engwall, 2006) and changes and constraints in the parent organization's structures, systems, and processes (Petit, 2012; Petit & Hobbs, 2010). Additionally, uncertainties may stem from the broader business environment, such as technical and market uncertainties, norms, and regulations (Petit, 2012); cooperation and contracts with suppliers and third parties (Petit & Hobbs, 2010); and technology turbulence (Voss & Kock, 2013). Furthermore, uncertainty may appear at the level of single projects due to changes, deviations, and unexpected events that may take place within the portfolio at the single-project level, and it may have an effect at the portfolio level. Although deviations and changes at the single-project level are increasingly studied and considered highly relevant to project success (Dvir & Lechler, 2004; Hällgren & Söderholm, 2010; Lechler, Edington, & Gao, 2012), thus far, few studies have linked such changes to the project-portfolio level (Petit & Hobbs, 2010; Olsson, 2008).

The above-mentioned empirical studies have largely explored project-portfolio-related uncertainties at the company level. Particularly Petit (2012) and Petit and Hobbs (2010) have highlighted that the ways in which individual managers deal with uncertainties will define whether and how portfolio management can become an organizational capability. Some studies indeed indicate that PPM could enable the creation of competitive advantage through its compilation of people, structures, and processes used to meet the requirements of the dynamic environment (Killen & Hunt, 2010; Killen, Hunt, & Kleinschmidt, 2008). How external information is gathered, interpreted, and used to mold managerial decisions and actions is the primary concern for managing project portfolios (Biedenbach & Müller, 2012).

Management Control Systems

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

Management control systems are defined as systems that support desired behaviors among the individuals in an organization (Chenhall, 2003; Malmi & Brown, 2008; Simons, 1991, 1994). Formal management controls include, for example, budgetary controls, organizational structures, and reporting procedures (Malmi & Brown, 2008; Merchant, 1982), which reflect one's accountability of an issue. Informal controls include, for example, using clan structures (Ouchi, 1979, 1980) and cultural and value controls (Malmi & Brown, 2008). Cultural types of controls, such as personnel selection, communication improvements, and shared goals, can help in situations when it is (1) unclear what specific tasks need to be done in order to reach goals and (2) difficult to measure results—for example, as in research laboratories (Merchant, 1982). There is also the need for management control systems to be periodically reviewed to continually match the ever-evolving context (Henri, 2010). For instance, performance measurement as a control mechanism demands continuous upkeep of timely goals, measures, routines of using measures, and linking measurement to decision making (Korhonen, Laine, & Suomala, 2013).

Management control systems are susceptible to subjectivist perceptions within organizations (Ahrens & Chapman, 2007). Managers have their own intentions in using controls (Tessier & Otley, 2012). In addition to the technical implementation of a management control system and the individual controls, control system enactment is a multifaceted phenomenon that greatly affects the consequences of a system (Chenhall, 2003; Tessier & Otley, 2012). There are controls such as strict control rules and formally defined routines; and contrastingly, controls that refer to more informal, flexible, and responsive ways of management (Chenhall, 2003; Ylinen & Gullkvist, ). Moreover, in addition to the decision-making domain, many managerial positions may be understood as practical coping in an uncertain environment (Chia & Holt, 2006), with implicit linkages to formal control systems.

In line with this, recent conceptual PPM research has suggested that project portfolio uncertainty management should not be considered merely a rational process, but may entail political and structural forces when managers must deal with surrounding uncertainties (Geraldi, 2008; Martinsuo, 2013). By serving as an umbrella, management control systems might provide understanding of PPM outside the rational domain. Indeed, a frame-work by Malmi and Brown (2008) can be used as a theoretical lens to analyze project portfolio uncertainty management. In this framework, management control systems as a package—management controls have been divided into elements of cultural controls (clans, values, and symbols); planning (long-range and action planning); cybernetic controls (budgets and measurement systems); administrative controls (policies and procedures, governance structure and organization structure); and reward and compensation (Malmi & Brown, 2008). By using these elements of management control, and their interfaces and interdependencies, it is possible to identify and understand uncertainty management within project portfolios.

Management Control Systems in Product Development Project Portfolios

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

Despite the vast background of management control systems in general, not much is known about controls for managing uncertainties, especially at the portfolio level, although, hints about management controls in project portfolios exist. For example, Cooper, Edgett, and Kleinschmidt (1997) explicitly link project selection to strategy and value maximization—and thus provide insight on policies in decision making, which can be considered administrative controls (Malmi & Brown, 2008). Petit and Hobbs (2010), however, find that strategic changes play a minor part in uncertainty management in project portfolios. Jonas’ (2010, p. 825) article implies that it is the duty of top or line management to exert management control to portfolios (i.e., “providing dedicated resources for the management of the project portfolio, delivering of timely decisions when problem situations arise, setting rules and standards, adherence to the defined processes and rules, and acting like role models in the system.”). In this case, Jonas (2010, p. 825) mentions, at least administrative controls (“setting rules and standards” and “defined processes and rules”) and cultural controls (“acting like role models”)—and even implies the existence of a sort of budget (for “providing dedicated resources”). More in-depth understanding is, however, needed in order to give guidance on how managers could use management controls in project portfolio uncertainty management. Because the project portfolio literature is rich on product development studies (Blomquist & Müller, 2006, p. 53), and the above examples reveal some control mechanisms taking place in PPM, we see potential in contributing to the understanding of project portfolio uncertainty management by the use of management control systems that include both formal and informal sides of control (Abernethy & Brownell, 1999; Chenhall, 2003; Ditillo, 2012; Ouchi, 1979, 1980; Ylinen & Gullkvist, in press).

A number of articles have been published that support the view that management control systems and different types of controls, when used properly, could actually overcome the challenges and risks of uncertainties, thus being beneficial in supporting innovation and performance in product development (see e.g., Abernethy & Brownell, 1999; Adler & Chen, 2011; Chapman, 1998; Davila, 2000; Davila, Foster, & Li, 2009). Jørgensen and Messner (2009) argued that a combination of suitable controls helps the managers to balance the needs for efficiency and flexibility in product development. Ylinen and Gullkvist (2012) surveyed 119 project managers to argue that a balanced and combined use of organic (or informal) and mechanistic (or formal) project controls is favored under high uncertainty. Ylinen and Gullkvist () also found that the interaction between organic (or informal) and mechanistic (or formal) controls was found favorable for project success. However, because of the identified lack of portfolio-level examinations, the most suitable controls for project portfolio uncertainties cannot be easily identified—pinpointing the need to understand how those controls are actually used (in line with, e.g., Chenhall, 2003; Malmi & Brown, 2008; Simons, 1995; Tessier & Otley, 2012). In this exploration, one should not focus solely on the means to reduce uncertainty and avoid risk, but on the balance in employing multiple controls (Ylinen & Gullkvist, 2012). A balance would mean, for example, the balance between the cybernetic controls, such as boundaries, and the cultural and administrative aspects that shape the behavior within an organization (Malmi & Brown, 2008), and also the balanced use of individual controls (Ylinen & Gullkvist, 2012).

Different Managerial Roles in Product Development Project Portfolio Management

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

Duncan (1972, p. 325) points out that uncertainties and related perceptions evolve over time and, therefore, require constant attention from managers: “uncertainty and the degree of the complexity and dynamics of the environment should not be considered as constant features in an organization. Rather, they are dependent on the perceptions of organization members and thus can vary in their incidence to the extent that individuals differ in their perceptions. Some individuals may have a very high tolerance for ambiguity and uncertainty, so they may perceive situations as less uncertain than others with lower tolerances.” It might be useful, therefore, to look at uncertainties and different managers’ subjectivist perceptions on the sources of uncertainty and their management, respectively. The existing literature offers insufficient understanding about how different organizational members perceive and manage uncertainties related to project portfolios. Different managerial roles within portfolio management might stem from different organizational responsibility structures that have an influence on management control systems, and how they are perceived among managers (see, e.g., Burchell, Clubb, Hopwood, Hughes, & Nahapiet, 1980; Mia & Chenhall, 1994)—which possibly moderates designing and using controls in cross-functional teams that product development activities are likely to be organized in (Rabino, 2001). The viewpoint of context-dependence is also central to PPM: “Program and portfolio management is […] not uniform and needs to be adapted to an organization's situation, given through its particular environment and business type. Along with this vary the roles and responsibilities of managers in these organizations.” (Blomquist & Müller, 2006, p. 52) In practice, differences in individual managers’ positions and personal characteristics (Duncan, 1972; Mia & Chenhall, 1994; Ylinen & Gullkvist, 2012) would have an effect on how managers perceive the sources of project portfolio uncertainties and the means to managing those uncertainties. For example, individuals’ tolerance for ambiguity is a person-dependent variable (Duncan, 1972; Ylinen & Gullkvist, 2012).

Several PPM roles have already been identified. Authors have mentioned managerial roles or positions such as senior and line managers (Beringer, Jonas, & Kock, 2013); portfolio manager (Beringer, Jonas, & Kock, 2013; Blomquist & Müller, 2006; Teller, 2013); chief risk officer (in risk management, Teller, 2013); program manager (Blomquist & Müller, 2006); and project manager (Beringer, Jonas, & Kock, 2013; Blomquist & Müller, 2006). In particular, it seems to be the task of the higher echelon to adapt to external sources of uncertainty; program managers typically take care of timing, resources, and achieving objectives; project managers are often responsible for quality (Blomquist & Müller, 2006). The role divisions discussed above, however, do not explicitly provide the financial manager's viewpoint on project management or PPM, even though this financial role has been advocated to be part of cross-functional teams in product development (Rabino, 2001). Chief risk officers (Teller, 2013); line managers (Beringer, Jonas, & Kock, 2013); and portfolio managers (Blomquist & Müller, 2006) view PPM from the viewpoint of business, but not necessarily within daily operations. Contrastingly, some authors suggest the inclusion of accountants (i.e., financial competence to new product development teams: these accountants could contribute to the profitability of a new product developed by providing, e.g., cost estimates and manufacturing constraints, as well as gaining new market intelligence) (Rabino, 2001).

Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

Altogether, different managerial roles, stemming from organizational structures and responsibilities, continuously have an effect on individuals’ perceptions of managing project portfolio uncertainties (Ahrens & Chapman, 2007; Burchell, Clubb, Hopwood, Hughes, & Nahapiet, 1980; Mia & Chenhall, 1994). Some uncertainties cannot be managed, but managers need to handle a project or portfolio, nonetheless, and even embrace some of the uncertainties or risks, or just cope with uncertainty (Chia & Holt, 2006; Miller & Lessard, 2001). Even improvisation and situated leadership have been discussed (Jerbrant & Gustavsson, 2013). Yet, there is inadequate understanding concerning the roles of different managerial positions in project portfolio uncertainty management in product development. Without this understanding, it is difficult to give practice-relevant guidance on how project portfolio uncertainty management should be organized. Indeed, there is potential, not yet fully used, in leveraging the subjective perceptions of different managerial roles to more thoroughly understand the management of uncertainty that affects product development project portfolios. In this article, we attempt to partially fill this gap.

Based on the literature analysis, it is possible to propose a tentative theoretical framework of project portfolio uncertainty management. In Figure 1, different managerial positions in project management and PPM have been coupled with the sources of project portfolio uncertainties and the management control system package as a means to managing those uncertainties.

image

Figure 1. The theoretical framework for analyzing the sources of product development project portfolio uncertainties and the management of those uncertainties.

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As Figure 1 illustrates, different managerial positions are expected to play different roles in product development portfolio management. Based on the existing literature, however, different managers’ responsibilities regarding product development PPM requires further research.

Research Methodology

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

We employed a qualitative multiple-case research design, due to the exploratory nature and the “how-type” research questions of this study. Interviews from six machinery manufacturing companies in Finland serve as our data. We used purposeful sampling in order to acquire data from companies that had medium R&D intensity, active and dynamic product development portfolios, and a previous history of managing product development in the forms of projects. Moreover, the interviewed companies represent typical machinery manufacturers with machinery and service products—a fact that might add to the generalizability of our findings to other machinery manufacturers.

The number of interviews included in this study totaled 17, with 21 interviewees. Originally, we conducted 22 interviews, with 27 interviewees at 10 companies, on the roles of accounting in R&D. Only six of those companies, had an industry background that was sufficiently consistent (i.e., machinery manufacturing) to minimize the effect of contextual variables for this paper, and gave us the opportunity to interview at least two different managerial roles. Interviewing multiple roles was important, because our primary interest in this article lies in the plurality of managerial roles in PPM. Our aim was to acquire an extensive picture of the sources and management of project portfolio uncertainties in each company. Some longer-term research collaboration had also taken place with five of the six interviewed companies. We see this as potentially contributing to the truthfulness and reliability of our interview data. Background information of the interviewed companies is presented in Table 1.

Table 1. Background information on organizations studied
#Company TypeNumber of EmployeesTurnover in EurosProject Portfolio Managed
1Machinery and service provider> 1,000> 1 billionA large, global R&D organization. Projects range from large-scale product development projects, technology development projects, and global delivery projects, to smaller customization projects, cost saving projects, and quality improvement projects. In some cases, there is not a clear distinction between customization and product development.
2Manufacturing systems and service provider< 500< 100 millionA small, national R&D organization where research and development activities are separated from each other. Concept development projects provide input for product development projects. However, products are developed also within customer projects when customers’ problems are being solved.
3Machinery and service provider> 500> 100 millionA small, national R&D organization, mostly working on customization. Customization is not organized in projects unlike new product development activities. Product improvements are also rarely organized in projects unless major redesign is conducted. The small engineering work, outside the official project portfolio, consumes more than 50% of the resource pool.
4Manufacturing machinery provider> 1,000> 1 billionA large, global R&D organization distributed between centers according to core competences. There are separate departments for technology development, product development and product improvement activities. Large product development projects and significant resource consumption in product improvements due to long product life cycles.
5Manufacturing machinery provider> 1,000> 1 billionA large, global R&D organization. New product development is organized in projects. Certain projects belong to a product development program. A separate department of engineers is responsible for product improvements.
6Machinery and service provider> 1,000> 300 millionA medium-sized, multinational R&D organization coordinated at the company level. Product development is organized in national units. Technology platform development and product development activities are organized in projects. Research is managed above the national units at the company level. Product improvements, in principle, have a separate resource pool. However, overlapping between product development and improvement activities exists.

In order to explore the different managerial roles in project portfolio uncertainty management, we selected interviewees from several different positions within the six companies studied. We interviewed people in the positions of product manager, business controller, R&D director, and project manager, who provide insight on each of the PPM roles identified earlier (i.e., portfolio manager (business), portfolio manager (financial), program manager, and project manager). Product managers hold insight and understanding of the markets and business-oriented issues. Business controllers are more financial management oriented, often due to official reporting responsibilities. The R&D director position was interpreted as a “program manager,” because of his or her role in allocating the available resources and coordinating portfolio implementation. The project manager role manages the projects and the outcome quality. Individuals’ exact titles and organizational positions varied by interviewed company, but we clustered the data with the help of our framework presented in Figure 1, according to the aforementioned principles of coupling interviewees’ positions to their roles in PPM.

However, there are some limitations in using the framework. First, some managers have a broad scope of tasks—for example, top managers also do general management, which might take place outside PPM. To overcome this obstacle, in our interview data, we clustered the managers into the most suitable managerial roles, for example, by dealing with the people responsible for a whole product line as product managers, and therefore, “portfolio managers (business).” Respectively, a person in the position of the highest-ranking financial officer is considered here as a “business controller,” thus having the role of a “portfolio manager (financial).” Second, it might be oversimplifying to use Blomquist and Müller's (2006) division of portfolio management roles to categorize business controllers. Indeed, people in the role of business controller could also act as program managers if they provide understanding of manufacturing constraints, and so forth, within operations (Rabino, 2001). We deal with this ambiguity by considering business controllers as portfolio managers (financial), because their tasks do not typically include resource allocation among projects (which is central to program managers). Table 2 illustrates the interviewed roles in each company. In the data, the roles of portfolio manager (financial) and project manager were interviewed little more often than the other roles.

Table 2. Background information on the respondents and the number of interviews
CompanyPortfolio ManagerProgram ManagerProject ManagerNumber of IntervieweesInterview Duration
BusinessFinancial
11 respondent (Higher management)1 respondent (Middle management)1 respondent (Middle management)1 respondent (Middle management)4208 min
21 respondent (Middle management)1 respondent (Top management)1 respondent (Higher management) 3338 min
3 1 respondent (Higher management)1 respondent (Middle management)1 respondent (Middle management)3104 min
41 respondent (Middle management)2 respondents (Middle management)1 respondent (Middle management)1 respondent (Middle management)5486 min
5 1 respondent (Middle management) 2 respondents (Middle management)3195 min
61 respondent (Middle management) 1 respondent (Higher management)1 respondent (Middle management)3568 min
TOTAL4 respondents (Product managers)6 respondents (Business controllers)5 respondents (R&D directors)6 respondents (Project managers)211899 min (31 h, 39 min)

In practice, we asked the interviewees which kinds of change pressures had emerged into the product development from outside the company, and from single projects during the past year. These two questions also revealed organizational-complexity-related uncertainties. The interviewees were also asked which kinds of effects these change pressures had, and how portfolio-level changes have been managed. Questions were phrased thematically, and the exact wording of questions varied by interview, as interviews progressed in interactive discussion. Questions on project portfolio uncertainties followed a brief investigation of each interviewee's professional background, and an inquiry of the objectives of R&D and of organizing and focal points of R&D in each company. We also interpreted that there were references to project/portfolio uncertainty, which occurred during other areas of interview (i.e., management control systems and accounting in R&D). These references were analyzed as well. However, only those means to managing uncertainties that were linked to some source of uncertainty were analyzed. This way it was possible for us to create a linkage between sources of project portfolio uncertainty to the means to managing specific uncertainties, from each manager's perspective.

Data were coded with Atlas.ti software and cross-tabulated in order to sort out the perceptions of each managerial role on the sources of uncertainty and means to managing those uncertainties. Single data points on the sources of and means to managing uncertainty were clustered into logical categories, in order to draw conclusions. Sources of uncertainties and means to managing those uncertainties were classified according to the framework presented in Figure 1, by each interviewed managerial role.

Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

Based on the interview data, rich accounts of different kinds of uncertainties from different sources were identified in managing the project portfolio. As presented, and in line with our tentative framework illustrated in Figure 1, these uncertainties are divided into environmental uncertainties, organizational complexities, and uncertainties stemming from individual projects. The interviewees portrayed a rather uniform distribution of these sources of uncertainty (see Figure 2).

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Figure 2. Perceptions of different managerial roles on the sources of uncertainty (average/interviewee).

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Environmental uncertainty was experienced, for instance, because of the dynamics in society (especially legislation), markets (especially customers) and industry, of which society and markets were the most frequently identified (see Appendix 1). Organizational uncertainties were discussed among interviewees in the forms of people and organizational politics, company systems and structures, and inter-project dependencies (especially resource allocation, project interaction, and project prioritization). Uncertainties from single projects were covered in our results from the perspectives of project characteristics, project evaluation, and the three dimensions of project goals: time (especially project duration), costs, and scope (especially project scope).

Based on the interviews, perceptions of uncertainty in product development portfolios vary between different managerial roles, but rather modestly, particularly with uncertainties related to organizational complexity. Figure 2 portrays the interviewees’ perceptions on the sources of uncertainty. The numbers in Figure 2 are averages per interviewee. More detailed data on the sources of uncertainty are presented in Appendix 1.

For portfolio managers (business), uncertainty stems, especially, from society, people, inter-project relations, and project scope. Portfolio managers (financial) particularly highlighted society-, market- and inter-project-relations–based uncertainties. Program managers highlighted society and markets, inter-project relations, and project scope as sources of uncertainty. For project managers, uncertainty stems especially from society and inter-project relations.

The results suggest that the sources of project portfolio uncertainty do not differ much among different managerial roles at the aggregate level (see Figure 2); however, on a more-detailed level (see Appendix 1), it seems that managerial roles have their specific pattern of seeing uncertainties particularly stemming from certain sources. One explanation for this is the relatively low number of respondents in the data, when compared with studies that provide quantitative analysis based on large empirical samples. It is possible, however, that the results explain how different managerial roles interact in uncertainty management in product development portfolios, outside their conventional roles.

The variety of sources of uncertainty, at the detailed level (see Appendix 1), could potentially underline the context-dependence of PPM; however, some sources of uncertainty were mentioned among different managerial positions in a relatively uniform manner, even at the detailed level. For example, resource allocation and project prioritization were mentioned almost equally across roles, which is a clear indication of the significance of these issues. Our initial intention here was to critically ponder on the fact that some uncertainties were brought up by managers in various roles in our data. We think that this piece of finding should not be interpreted too straightforwardly so that issues mentioned more often would always hold, for example, more improvement potential when solved. We consider these things to be context-dependent.

Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

The means to managing uncertainties were mentioned more rarely and less uniformly—as illustrated in Figure 3—than the sources of uncertainty. On a general level, portfolio managers (business) deal with uncertainties with the help of planning and culture; portfolio managers (financial) use multiple controls relatively equally; program managers use cultural controls; and project managers use planning. As Figure 3 portrays, each managerial role has a specific pattern of preferred management controls. Planning controls seem to hold a relatively equal potential among managers in different roles. The use of cybernetic controls in managing uncertainty is shared among fewer managerial roles. Cybernetic controls are mentioned only by portfolio managers (business) and project managers.

image

Figure 3. Perceptions of different managerial roles on the means to managing uncertainty (average/interviewee).

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In Table 3, which reflects the research framework, different managerial roles are connected with these managers’ perceptions of the sources of uncertainty and the management of each type of uncertainty, respectively. Managers in different roles use certain controls to manage certain sources of uncertainty according to a role-specific pattern. For example, whereas portfolio managers (both business and financial) connect cultural controls with single-project-related uncertainties, program managers connect cultural controls also with environmental uncertainty, and project managers connect them with uncertainty stemming from organizational complexity. Project portfolio managers (again both business and financial) associated administrative controls with single-project-related uncertainties, and program managers associated administrative controls with environmental uncertainty. In contrast to cultural controls, administrative controls are related by project managers to managing uncertainty from all sources: environment, organizational complexity, and single projects.

Table 3. Mentioned means to managing project portfolio uncertainty from the viewpoints of different managerial roles
  Environmental UncertaintyOrganizational-Complexity-Related UncertaintySingle-Project-Related Uncertainty
Portfolio manager (business)Highlighted sources of uncertainty:SocietyPeople and inter-project relationsScope
(Sum: 5)Means to manage uncertainty:Planning (1)Planning (1)Cultural controls (1) Planning (1) Administrative (1)
Portfolio manager (financial)Highlighted sources of uncertainty:Society and marketsInter-project relations
(Sum: 7)Means to manage uncertainty:Planning (1)Planning (1)Cultural (2) Planning (1) Cybernetic (1) Administrative (1)
Program managerHighlighted sources of uncertainty:Society and marketsInter-project relationsScope
(Sum: 6)Means to manage uncertainty:Cultural (2) Planning (1) Administrative (1)Planning (1)Cultural (1)
Project managerHighlighted sources of uncertainty:SocietyInter-project relations
(Sum: 14)Means to manage uncertainty:Planning (3) Administrative (1)Cultural (1) Planning (3) Cybernetic (1) Administrative (1)Planning (2) Cybernetic (1) Administrative (1)

Where planning controls were mentioned in managing various uncertainties, cultural and cybernetic controls, for example, were rarely mentioned. Reward and compensation were not mentioned in any of the interviews. Moreover, our results concerning the moderately balanced set of planning controls among different managerial roles implies a cooperative use of planning controls within the organizations interviewed. These planning controls might, thereby, be coordinated by a few individuals in top management, but used as a safety net by many individuals within organizations, as the following examples illustrate. Planning controls can be used to manage customer-related uncertainties in portfolio management (business): “Some small window or buffer we can accept from the buyer. […] If we start executing some big project, it takes years to turn the big ship” (portfolio manager [business], Company 1) Project portfolio management and planning tools can be used to manage single-project-related and organizational-complexity-related uncertainties, in portfolio management (financial): “… what we should have is the synthesis of the main projects, new product projects, and what amount of money has been spent in relation to the budget. […] and the project is ‘there on that gate,’ it's ‘that many months behind schedule,’ […] ‘the product launch should be there.’ This kind of an overall picture would be smart. […] You could see it all at once: ‘this is what we're doing now’” (portfolio manager [financial], Company 4). Evaluation of business opportunities and planning their implementation can help manage market-related uncertainties: “The market changes all the time, the market develops and consequently portfolio management is not easy because new customer needs always occur. […] Then we have these discussions again about whether the business is profitable, and make decisions on whether we're going to start it [the new business] and how we schedule it” (program manager, Company 6). Finally, an example can be given of how project management uses planning controls in managing uncertainty of available resources: “… it's very clear what our expected, available resources are […] We did this exercise of estimating what our roadmap would look like if we had more resources than at the moment […] and the priorities of different products can change. What was number two on the list, it becomes number one” (project manager, Company 4).

Similar use of management controls, as presented above with regard to planning, would also be natural for shared values. One portfolio manager (business) brought up the need to believe in intuition, and thus employees’ expertise, when faced with a single-project-related uncertainty with scope: “There is some intuition there. If we iterate the mathematical model, we get a cheap and imprecise [feature], that we can't accept due to image reasons” (portfolio manager [business], Company 2). One could easily argue that in the above case, shared values of high quality would be centrally coordinated, or at least commonly generated through time and common experience within the organization—and thereby lead to intuitive, yet successful decision making. Another interviewee pointed out that they had generated new ways of thinking because of failure in single projects: “… there are some examples in our history in which we noticed that the project didn't go as planned. And then we have to execute some after-project […] and then it [executing the project] changes toward thinking different solutions, even dramatic ones to fix the situation—this generates a new, innovative world” (portfolio manager [financial], Company 4). In this case, shared values of learning from past mistakes help in managing uncertainty stemming from single-project-related failure.

Our results show that organizational-complexity-related uncertainties are managed, particularly with planning, for example: “… of course we see the results of a project even a little before the project ends, and that's something that fixes certain things in the roadmap. If the project goes well, we might go into some further development. Or if the results look like that it is not worth going further, then certain things become available [for something else]” (project manager, Company 4). In this case, there is uncertainty stemming from single projects that is turned into organizational complexity because of inter-project relations and a shared resource pool. Managers try to manage this kind of uncertainty by planning ahead before a project is finished—whatever the outcome. In addition, other means to managing organizational-complexity-related uncertainty were mentioned by our interviewees, but solely by project managers. These results imply that organizational complexity is something that is managed in companies in the long term, by planning ahead. Resource conflicts remain an inconvenient matter, although probably solved by situated actions, case-by-case. Planning is also highlighted across different managerial roles as a means to managing environmental uncertainty. Business impact analyses and competitor analyses help managers manage uncertainty stemming from society, markets, and industry. Environmental uncertainty is further managed with cultural control by shared values of prioritizing customer and safety issues over internal development projects; operating, based even on some guesses or assumptions; and with administrative controls in the forms of stage-gate processes and policies to fulfill only customer demands that serve more than one customer. Single-project uncertainties are managed with more diversity of controls in our data. Again, planning controls were vastly mentioned, although program managers did not come to mention many means to managing single-project-related uncertainty, but only within cultural controls.

Altogether, our data portray management control systems to managing project portfolio uncertainty in which using the controls is cooperative among managers in different roles. Our results show that it is not only the task of those of the higher echelons to manage uncertainty in project portfolios—but it is a task for portfolio managers, program managers, as well as for project managers. At least, it seems that managers in all of these roles identify some controls for managing project portfolio uncertainties. Although it is impossible to draw definite conclusions of different managers’ absolute roles in PPM, in the following section, we will attempt to give some guidance on how the results add to the contemporary knowledge of project portfolio management. Further, based on our results, we propose a practical tool with which to assess uncertainty management capabilities in PPM.

Discussion

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

In this article, we sought increased knowledge on the management control of project portfolio uncertainties, particularly across the different managerial roles. We have used empirical data from six machine manufacturing firms to provide answers to two research questions: (1) How do managers in different roles perceive project portfolio uncertainties? And (2) How do managers in different roles perceive management controls as means to managing project portfolio uncertainties? As a key result, this study has demonstrated the versatility of uncertainties experienced by managers, the limited degree of perceived control over them, the use of an almost complete management control package in managing uncertainties, and the necessity of managers’ cooperation in the skilled use of the management control package, when managing uncertainties.

Considering the first research question, the results showed managers’ fairly well-balanced perceptions across environmental, organizational, and project-based uncertainties, although environmental and project-based uncertainties were focused on in interview questions; little variance existed across the different managerial roles with regard to their perceptions of the sources of uncertainty. The results confirm the need to pay attention to uncertainties more broadly than at the organizational level only (see, e.g., Petit & Hobbs, 2010), and point out the broad visibility to project portfolio uncertainties at multiple organizational levels. Particularly, portfolio, program, and project managers painted a relatively uniform picture of uncertainties stemming from organizational complexity. Moreover, it seems that environmental and single-project-related uncertainties are indirect to some managers. In this case, managers face environmental and single-project-related uncertainties through organizational complexity, as the managers need to, for example, compromise the resources consumed by the project portfolio to take care of urgent customer needs. The indirectness of single-project and environmental uncertainty was demonstrated in our results, when managers mentioned organizational-complexity-related uncertainties although they were asked about environmental and single-project-related uncertainties.

The findings contribute to the ongoing discussions on PPM, by providing understanding about the differences between different managerial roles in project portfolio uncertainty management. We respond to Jerbrant and Gustavsson (2013, p. 167), who brought up the “need for a better understanding of project portfolio management in practice, and an awareness of the need of uncertainty management […] at other types of project-based organizations also [than project management offices].” In the results, project portfolio uncertainty is not central to individuals solely inside project management offices, but more broadly in business management. In addition to project and program managers, portfolio managers (both business and financial) are also key players in PPM with regard to uncertainty. Particularly, the results lend support to Rabino (2001) in his proposal to include accountants in product development teams, because portfolio managers (financial) have a wide visibility over uncertainty in PPM. The results suggest three propositions:

Proposition 1. Uncertainties from single projects and the broader business environment are equally important to project portfolio management as uncertainties from organizational complexities.

Proposition 2. Project, program, and portfolio managers all have good awareness of uncertainties relevant to project portfolio management.

Proposition 3. Project, program, and portfolio managers face environmental and single-project-related uncertainties indirectly, through organizational complexity.

Considering the second research question, where previous research has mentioned managers’ access and use of information in reducing uncertainty (e.g., Davila, 2000), our results link uncertain project portfolios to the management control systems used by the parent organization to measure and deliver such information in a holistic manner. The results show that a management control system for project portfolio uncertainties features both formal and informal components in line with the management control system package (Malmi & Brown, 2008, excluding reward and compensation), is not in very active use for portfolio uncertainty management, and is differently used by different managerial roles. Thereby, the results offer important input to understanding how project portfolio management may (or may not) become a strategic capability of a firm. When reflecting our findings to those by Blomquist and Müller (2006); Beringer, Jonas, and Kock (2013); and Teller (2013), the results show the cooperation among different managers in PPM and thus portray distributed responsibilities between middle, higher, and top management in managing uncertainty. This paper expands Teller's (2013) view on including project managers in risk management, by proposing that project managers play a role in project portfolio uncertainty management as well; and it decreases the emphasis of higher echelon in PPM (Beringer, Jonas, & Kock, 2013; Blomquist & Müller, 2006). Our results show the potential of including several managerial roles in comprising a total company-wide pattern of un-certainty management (Jerbrant & Gustavsson, 2013), with possible balance between formal and informal controls (Ditillo, 2012; Geraldi, 2008; Martinsuo, 2013; Ylinen & Gullkvist, 2012), and understanding of the interplay between different controls (Malmi & Brown, 2008), under different time-frame-based dynamics (Korhonen, Laine, & Suomala, 2013; Petit, 2012). Three additional propositions are suggested:

Proposition 4. Effective uncertainty management requires a management control package, featuring multiple planning, cybernetic, cultural, and administrative mechanisms of control.

Proposition 5. Reward and compensation controls, as part of a control package, play a minor part in project portfolio uncertainty management.

Proposition 6. Project, program, and portfolio managers’ cooperation in uncertainty management will improve PPM success potential, because of their ability to jointly use management control relevant to PPM success.

The results of this study draw attention to the use of a holistic management control system for the purpose of uncertainty management in project portfolios. The results are in line with the idea of balance in employing multiple controls (Ylinen & Gullkvist, 2012), thus conveying the message of employing different controls across the management control system package available (Malmi & Brown, 2008). In line with the previous knowledge about the PPM roles, portfolio managers rely on planning controls in response to different portfolio uncertainties, whereas program managers—responsible for the R&D resources—place more emphasis on the cultural controls in managing the external and single-project related uncertainties. Surprisingly, the role of project managers requires employment of multiple controls in response to the project portfolio uncertainties even if environmental uncertainties were largely tackled by other managerial roles. It is possible that portfolio managers (business and financial) are capable of filtering some of the environmental uncertainty, and can thereby reduce this burden on project managers. The results also convey the message that project managers might be burdened with the responsibility of managing uncertainty, and with a more extensive set of controls than the other PPM roles. One possible explanation for project managers’ burden is that project managers operate with relatively concrete interfaces with other managerial roles (e.g., reporting project statuses in steering groups) and fulfill the objectives set by, for example, portfolio managers and program managers. The project managers’ active roles in uncertainty management might be explained by their relatively short planning horizon, which makes uncertainty management an everyday task.

Managerial Implications

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

Although the results from six companies in the machine manufacturing industry do not allow definitive conclusions and normative guidelines for how PPM should be organized, our data suggest that managers in different roles vary more in their ability to identify means to managing uncertainty than sources of uncertainty. As an implication of these results, we propose that practitioners could assess their organizational capabilities to identify and manage uncertainties in PPM in order to meet strategic objectives (Biedenbach & Müller, 2012; Killen & Hunt, 2010; Killen, Hunt, & Kleinschmidt, 2008; Petit, 2012; Petit & Hobbs, 2010). Figure 4 illustrates the pattern of management control used in managing project portfolio uncertainty stemming from different sources, as mentioned by different managerial roles. Figure 4 not only summarizes the key results but also constitutes a practical tool for assessing PPM capabilities in a company. The darker the grey shading in the circles in Figure 4, the more often a source of uncertainty was mentioned by interviewees in different managerial roles. The different types of lines represent different types of management control in the data, and the line weight corresponds to the frequency of these controls. Moreover, the analysis conveyed that by assessing managers in multiple PPM roles, organizations could potentially find improvement potential in their ability to succeed in meeting their strategic objectives by PPM. In this assessment, data from an organization could be gathered via interviews among different managerial roles relevant to PPM. We do not limit the possible relevant parties to the ones that we interviewed, nor do we limit the topical issues or specific controls to be included in such assessment. Building on Malmi and Brown (2008), we argue that by viewing the management control system as a package and, in particular, by identifying the different roles in the management control system package enactment, managers may identify the potential of developing company practice.

image

Figure 4. Summary of the findings: A practical tool for assessing uncertainty management in project portfolios.

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Companies should assess uncertainty management capabilities among portfolio, program, and project managers to identify their improvement potential and thus enhance project portfolio performance, and to make project portfolio management a dynamic capability.

Conclusions

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies

This article provides at least four contributions to the PPM literature. First, we provided further empirical evidence of the multiple sources of uncertainty in PPM, and the variety of uncertainties that managers in different roles see. In particular, the significance of single-project-related uncertainties in the results adds to ongoing discussions in the PPM literature. Second, although previous research has acknowledged the different types of management controls existing in PPM, there are few empirical data to provide understanding of how these controls interact or should be balanced. This study provided avenues to fill this knowledge gap. Third, previous literature has pointed out the need to consider different managerial roles in project portfolio uncertainty management. This study directly addresses this need and furthers understanding of portfolio, program, and project managers’ roles in managing uncertainties. As a key result, the study showed that there is more variety among managerial roles in managing than in perceiving uncertainty, and managers identify more numerous sources of uncertainty than means to managing uncertainties with. Moreover, using management controls (such as tools for planning, shared values, and policies for decisions making) in uncertainty management is role-specific, and these controls can be used in cooperation by various project-portfolio-related managers. Fourth, we provided both a theoretical framework and a practical tool for analyzing uncertainty management in project portfolios. Academic researchers could use the analysis framework (see Figure 1) to further test the extent to which different types of controls exist in project portfolio uncertainty management. Managers could use the proposed practical tool (see Figure 4) to assess the organizational capability of managing portfolio uncertainties.

Altogether, we argue that uncertainty management is not only a project manager's or senior manager's task but an arena for these managers to cooperate. However, the contributions leave some central questions unanswered—for example, future researchers could respond to the following issues:

  1. The results featured some propositions regarding tendencies of uncertainty identification and management in machinery manufacturing firms. Such propositions could be developed further and tested, also in different contexts.
  2. Uncertainty management in project portfolios has an important conceptual link with dynamic capabilities. Further research is needed to connect uncertainty management with firm performance and its continuity in dynamic conditions.
  3. The results in this paper suggest that the patterns of perceiving and managing uncertainty seem to vary among different managerial roles, but they do not explain whether it is more beneficial or harmful to have a shared perception of the sources and management of uncertainty, under certain circumstances, among managers in different roles. This opens up an avenue for future researchers to contribute.
  4. The results implied that different managerial roles might operate according to different time horizons, which could alter their perception of the sources and management of uncertainty in product development project portfolios. However, how the different time horizons of different managers need to be taken care of in PPM is yet to be thoroughly scrutinized.
  5. Further research could try to explain how negative and positive uncertainties, i.e., threats and opportunities, are dealt with in project portfolio management practice.
  6. We studied uncertainties and their management at the individual-manager level, but we revealed the prospect and even necessity of cooperation in the use of the holistic management control package in uncertainty management. Further research could purposefully follow the events and episodes (see e.g., Martinsuo, 2013) where uncertainties are jointly identified and negotiated by management teams or project teams, in collaborative settings.

Both quantitative and qualitative studies are welcome to provide further understanding about the issues addressed in this study; in particular, large-sample studies are welcome to explain to what extent managers in different countries and among different industries share visibility to sources of project portfolio uncertainty. In-depth studies, such as case studies, could explore best practices in managing project portfolio uncertainties, and possibly explain different path-dependencies between sources of uncertainty to management of uncertainty.

References

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies
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Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies
Source of UncertaintySum(Number, companies in which mentioned)
Portfolio Manager (business)Portfolio Manager (financial)Program ManagerProject Manager
Environment4810171011
Society235756
Legislation112423
Complexity61221
Global economy3111 
Environmental values31  2
Markets183753
Customers122442
Safety51211
Developing markets1 1  
Industry723 2
Competitors4 3 1
Technology maturation22   
Research companions1   1
Organizational complexity479121214
People144244
Organizational politics81223
Competences32 1 
Technology push31 11
Company71411
Organizational structure51211
Production site decisions1 1  
Function interaction1 1  
Inter-project relations264679
Resource allocation92223
Project interaction71222
Project prioritization51 22
Project startup date3 111
Uneven workload distribution1 1  
Change into portfolio thinking1   1
Single projects44914129
Project characteristics2  11
Large special projects1  1 
Development site decisions1   1
Evaluation82213
Goal complexity3111 
Learning from single projects31  2
Project failure1 1  
Project success1   1
Time101333
Project duration101333
Cost7 421
Project budget4 31 
Product cost3 111
Scope176551
Project scope6132 
Product features4211 
Multi-product platform31 11
Component features21 1 
Component availability211  

Biographies

  1. Top of page
  2. ABSTRACT
  3. INTRODUCTION
  4. The Sources of Uncertainty in Project Portfolio Management
  5. Management Control Systems
  6. Management Control Systems in Product Development Project Portfolios
  7. Different Managerial Roles in Product Development Project Portfolio Management
  8. Tentative Framework to Understanding Project Portfolio Uncertainty Management in Product Development
  9. Research Methodology
  10. Results on the Sources of Project Portfolio Uncertainty Among Different Managerial Roles
  11. Results on the Means to Managing Project Portfolio Uncertainty Among Different Managers
  12. Discussion
  13. Managerial Implications
  14. Conclusions
  15. Acknowledgments
  16. References
  17. Appendix: Data on the Perceptions of Different Managerial Roles on the Sources of Uncertainty
  18. Biographies
  • Tuomas Korhonen holds an MSc (Tech.) in industrial management from Tampere University of Technology, Finland. He is a PhD candidate at the Cost Management Center (CMC) at Tampere University of Technology, majoring in management accounting. His research interests lie in studying performance measurement dynamism and the potential of management accounting in contributing to research and development management and conducting interventionist research within real-life organizations. He can be contacted at tuomas.korhonen@tut.fi

  • Teemu Laine received a DSc (Tech.) in industrial engineering and management in 2009. He completed his dissertation focusing on the infusion of services into manufacturing. Currently, he works as an associate professor and team manager for the Cost Management Center (CMC) at Tampere University of Technology, Finland. His current research interests include management accounting in service business and R&D management contexts. He can be contacted at teemu.laine@tut.fi

  • Miia Martinsuo is a professor of industrial management at Tampere University of Technology, Finland. Her field of research and teaching is industrial management, particularly project and service business. Her current research interests include decision making in product development; steering and selecting product development project portfolios; the autonomy, control, and efficiency of product and service development projects; and service business innovation. She has co-authored over 100 articles, book chapters, and books and is an active lecturer and coach in continuing education programs. She holds a DSc (Tech.) degree in industrial engineering and management from Helsinki University of Technology, Finland. In addition to her university experience, Professor Martinsuo has worked for almost ten years in industrial firms and consulted with dozens of international firms and public organizations on strategy, business process development, and management development, especially in the metal and engineering industry. She can be contacted at miia.martinsuo@tut.fi