MJ Smit Portfolio Management.pdf - Development of a project portfolio management model for executing organisational strategies A normative case study MJ

MJ Smit Portfolio Management.pdf - Development of a project...

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Unformatted text preview: Development of a project portfolio management model for executing organisational strategies: A normative case study MJ Smit orcid.org/0000-0002-4437-3816 Thesis submitted in fulfilment of the requirements for the degree Doctor of Philosophy in Development and Management Engineering at the North-West University Promoter: Prof JH Wichers Graduation May 2018 Student number: 28525868 ABSTRACT Various research studies show that organisations struggle to bridge the gap between strategy formulation and its day-by-day implementation (Project Management Institute, 2014a and 2016b; Morris and Jamieson, 2004; Sull, Homkes, and Sull, 2015). These studies also show that organisations are not effectively implementing and applying portfolio management (also referred to as project portfolio management in the literature to distinguish it from financial portfolio management) best practices to achieve strategic results. Understanding the value of portfolio management, implementing and applying best practices are vital to successfully execute business strategies and strategic objectives. This research study is a normative case study to develop a portfolio management model for Eskom, the South African National Electricity Utility, to effectively implement and embed portfolio management best practices and enhance decisionmaking to select, categorise, prioritise, optimise and balance, authorise, plan and manage the right projects and programmes and allocate the limited resources (e.g. funds and manpower) available to maximise business value and deliver strategic results effectively. The research study also expands the theory/body of knowledge on the steps (activities, processes, roles and responsibilities, tools and techniques, etc.) to be followed to successfully implement and embed portfolio management in organisations. The implementation of the recommendations resulting from this research can improve the maturity of portfolio management processes and contribute towards Eskom becoming a high agile organisation by ensuring that projects and programmes align to the strategic objectives and delivers the required strategic results as outlined in Eskom’s Corporate Plan. The effective application of portfolio management best practices within Eskom will result in a more reliable security of electricity supply to meet the electricity demand in South Africa. The development of a portfolio management model can also serve as a blueprint for other State Owned Companies and other organisations. Keywords: qualitative research, normative case study; organisational strategies execution; portfolio management model; portfolio management best practices, portfolio management implementation steps II ACKNOWLEDGEMENTS I would like to express my gratitude and appreciation to the following persons and organisations: My promotor, Professor Harry Wichers, North West University, for his motivation, guidance and support during the research journey. My employer, Eskom Holdings Limited, for assistance and support during the research study and access to relevant information and staff. My manager, Pieter Underhay, the EPMO Senior Manager for his interest, support and guidance in this research study. My colleagues in Eskom that participated in the one-to-one and group interviews to review and finalise the portfolio management model for Eskom. My wife Zéta, for her love and support throughout this journey. Our Heavenly Father, for giving me the faith, strength, courage, persistence and patience and answering my prayers during the journey of learning. III BRIEF TABLE OF CONTENTS PART 1: INTRODUCTION AND RESEARCH DESIGN ......................................................................... 1 CHAPTER 1: BACKGROUND AND RATIONALE .................................................................................. 1 CHAPTER 2: RESEARCH DESIGN ..................................................................................................... 16 PART 2: LITERATURE REVIEW .......................................................................................................... 42 CHAPTER 3: INTRODUCTION TO PORTFOLIO MANAGEMENT ..................................................... 42 CHAPTER 4: PORTFOLIO MANAGEMENT STRATEGIC CONTEXT AND SUSTAINABILE DEVELOPMENT ................................................................................................................................... 61 CHAPTER 5: PORTFOLIO GOVERNANCE AND ROLES OF KEY FUNCTIONS INVOLVED IN PORTFOLIO MANAGEMENT............................................................................................................... 91 CHAPTER 6: BUSINESS VALUE AND BENEFITS MANAGEMENT................................................. 138 CHAPTER 7: PORTFOLIO MANAGEMENT STANDARDS, MODELS, FRAMEWORKS AND RELATED BEST PRACTICES/PROCESSES .................................................................................... 156 CHAPTER 8: PORTFOLIO MANAGEMENT PROCESS TOOLS AND TECHNIQUES ..................... 214 CHAPTER 9: PORTFOLIO MANAGEMENT SOLUTIONS ................................................................ 323 CHAPTER 10: IMPLEMENTATION OF PORTFOLIO MANAGEMENT IN AN ORGANISATION ..... 357 PART 3: DATA COLLECTION, ANALYSIS AND RESULTS .............................................................. 395 CHAPTER 11: TENTATIVE PORTFOLIO MANAGEMENT MODEL ................................................. 395 CHAPTER 12: ESKOM PORTFOLIO MANAGEMENT MODEL ........................................................ 422 PART 4: RECOMMENDATIONS AND CONCLUSIONS .................................................................... 521 CHAPTER 13: RECOMMENDATIONS FOR IMPLEMENTING THE ESKOM PORTFOLIO MANAGEMENT MODEL..................................................................................................................... 521 CHAPTER 14: CONCLUSIONS ......................................................................................................... 534 REFERENCES .................................................................................................................................... 539 ANNEXURES ...................................................................................................................................... 545 IV COMPREHENSIVE TABLE OF CONTENTS PART 1: INTRODUCTION AND RESEARCH DESIGN ......................................................................... 1 CHAPTER 1: BACKGROUND AND RATIONALE .................................................................................. 1 1.1 Introduction.............................................................................................................................. 2 1.1.1 Background ................................................................................................................. 2 1.1.2 Aim .............................................................................................................................. 2 1.2 Key focus of the research study .............................................................................................. 2 1.3 Background setting of the research problem .......................................................................... 2 1.4 Current level of knowledge about the problem ....................................................................... 4 1.4.1 Literature review .......................................................................................................... 4 1.4.2 The Eskom case.......................................................................................................... 6 1.5 1.4.2.1 Overview of Eskom ................................................................................................. 6 1.4.2.2 Global trends in the power industry......................................................................... 6 1.4.2.3 Statement of shareholder’s strategic intent ............................................................. 7 1.4.2.4 Eskom strategy........................................................................................................ 8 1.4.2.5 Eskom’s Back2Basics programme.......................................................................... 8 Definition of the research problem .......................................................................................... 9 1.5.1 Current state of portfolio management in Eskom ........................................................ 9 1.5.2 Research question ...................................................................................................... 9 1.5.3 Aim and objectives of the study ................................................................................ 10 1.5.3.1 General objective (main objective) ........................................................................ 11 1.5.3.2 Specific objectives (sub-objectives) ...................................................................... 11 1.6 Motivation (rationale) for the study and anticipated contribution of the study ....................... 12 1.7 Research design ................................................................................................................... 13 1.8 Research ethics .................................................................................................................... 13 1.9 Thesis outline and deliverables ............................................................................................. 13 CHAPTER 2: RESEARCH DESIGN ..................................................................................................... 16 2.1 Introduction............................................................................................................................ 17 2.1.1 Background ............................................................................................................... 17 2.1.2 Aim ............................................................................................................................ 18 V 2.2 Research model/type of research ......................................................................................... 18 2.3 Research philosophy ............................................................................................................. 19 2.4 Research approach ............................................................................................................... 20 2.4.1 Choosing a qualitative, applied, deductive and inductive research approach .......... 21 2.4.2 Qualitative research and its key features .................................................................. 22 2.4.3 Key scientific beliefs/philosophical assumptions ....................................................... 25 2.5 2.4.3.1 Ontology ................................................................................................................ 25 2.4.3.2 Epistemology ......................................................................................................... 26 2.4.3.3 Axiology assumptions............................................................................................ 27 2.4.3.4 Rhetorical assumptions ......................................................................................... 27 2.4.3.5 Methodological assumptions ................................................................................. 28 2.4.3.6 Paradigms or worldviews ...................................................................................... 29 Normative case study as research strategy and methodology ............................................. 31 2.5.1 Research setting ....................................................................................................... 35 2.5.2 Entrée and establishing researcher roles ................................................................. 35 2.5.3 Sampling ................................................................................................................... 35 2.5.3.1 2.5.4 Non-probabilistic purposive sampling ................................................................... 36 Data collection methods ............................................................................................ 36 2.5.4.1 Literature review .................................................................................................... 36 2.5.4.2 Questionnaire survey (closed questions with comments) ..................................... 36 2.5.4.3 Semi-structured one-to-one and group interviews ................................................ 36 2.5.4.4 Participant as observer.......................................................................................... 37 2.5.5 Recording of data ...................................................................................................... 37 2.5.6 Data analysis ............................................................................................................. 38 2.5.7 Strategies to ensure quality research........................................................................ 38 2.5.7.1 Validation strategies .............................................................................................. 38 2.5.7.2 Evaluation criteria .................................................................................................. 39 2.5.7.3 Assessing the findings (reliability) ......................................................................... 40 2.5.8 2.6 Reporting ................................................................................................................... 41 Summary ............................................................................................................................... 41 VI PART 2: LITERATURE REVIEW .......................................................................................................... 42 CHAPTER 3: INTRODUCTION TO PORTFOLIO MANAGEMENT ..................................................... 42 3.1 Introduction............................................................................................................................ 43 3.1.1 Background ............................................................................................................... 43 3.1.2 Aim ............................................................................................................................ 43 3.2 Overview of portfolio management ....................................................................................... 43 3.2.1 What is a portfolio?.................................................................................................... 43 3.2.2 What is portfolio management? ................................................................................ 44 3.2.3 Context and need for portfolio management ............................................................. 46 3.2.4 Relationship between portfolio management, programme management, project management and organisational project management ................................................................ 47 3.2.5 Capabilities and constraints ...................................................................................... 50 3.2.6 Opportunities and threats .......................................................................................... 50 3.2.7 Stakeholder engagement and management ............................................................. 50 3.3 Portfolio management principles ........................................................................................... 51 3.3.1 Senior management commitment ............................................................................. 52 3.3.2 Governance alignment .............................................................................................. 53 3.3.3 Strategy alignment .................................................................................................... 53 3.3.4 Portfolio Office ........................................................................................................... 54 3.3.5 Energised change culture ......................................................................................... 55 3.4 Benefits of applying portfolio management ........................................................................... 56 3.5 Summary, integration and conclusions ................................................................................. 58 CHAPTER 4: PORTFOLIO MANAGEMENT STRATEGIC CONTEXT AND SUSTAINABLE DEVELOPMENT ................................................................................................................................... 61 4.1 Introduction............................................................................................................................ 62 4.1.1 Background ............................................................................................................... 62 4.1.2 Aim ............................................................................................................................ 62 4.2 Strategic management .......................................................................................................... 62 4.2.1 Overview of business strategy and strategic management process ......................... 62 4.2.1.1 Definition, nature, scope and importance of strategy and strategic management 62 4.2.1.2 Strategic management process ............................................................................ 63 VII 4.2.1.3 Strategic management principles and phases ...................................................... 65 4.2.1.4 Strategic decision-making ..................................................................................... 66 4.2.1.5 Role of strategists.................................................................................................. 67 4.2.1.6 Defining strategic intent (vision, mission, business definition, goals and objectives) ............................................................................................................................... 67 4.2.2 Environmental analysis ............................................................................................. 69 4.2.3 Corporate level and business level strategies .......................................................... 70 4.2.4 Resource allocation, projects and procedural issues ................................................ 70 4.2.5 Organisation structure and system in strategy implementation ................................ 70 4.2.6 Strategic control and operational control, organisational system and techniques of strategic evaluation....................................................................................................................... 71 4.2.7 Difference between strategic management, operations management and portfolio management................................................................................................................................. 72 4.3 Relationship between organisational strategy, portfolio, programme and project management ......................................................................................................................................... 74 4.4 Linking portfolio, programme and project management to business strategy ...................... 75 4.5 Strategy execution ................................................................................................................ 82 4.5.1 Strategy execution trends ......................................................................................... 82 4.5.2 Strategy execution problems ..................................................................................... 83 4.6 Sustainable development ...................................................................................................... 86 4.7 Summary, integration and conclusions ................................................................................. 87 CHAPTER 5: PO...
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