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An investigation of the influence of organizational design on project portfolio

success, effectiveness and business efficiency for project-based organizations

Article in International Journal of Project Management · August 2015

DOI: 10.1016/j.ijproman.2015.08.004

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International Journal of Project Management xx (2015) xxx – xxx
www.elsevier.com/locate/ijproman

An investigation of the influence of organizational design on

project portfolio success, effectiveness and business efficiency
for project-based organizations
Yacoub Petro a,⁎, Paul Gardiner b
a
MWH Global Middle East
b
SKEMA Business School, Lille, France

Received 26 January 2015; received in revised form 5 August 2015; accepted 6 August 2015

Abstract

Many researchers have investigated the organizational structural factors and their influence on project success. Later, researchers moved
towards investigating the portfolio success and effectiveness as a new area of study. We note that all such constructs are a product of strategy, and
if not aligned correctly, a dichotomy will appear between strategy (portfolio) and its translation (structure) with an effect on performance. Our
literature review revealed that no research has investigated the relationship between structure and portfolio elements. In this research we present the
portfolio success and the Project Portfolio Management (PPM) effectiveness in one global construct which represents business efficiency for the
project-based organization. A significantly strong relationship was then established between the project manager's influence on the organization –
as part of its structure/design — and the business efficiency constituent variables. We also investigated steering committee's level of involvement
which successfully acted as a moderator for the research established relationships.
© 2015 Elsevier Ltd. APM and IPMA. All rights reserved.

Keywords: Project portfolio success; Project portfolio management efficiency; Project manager influence; Steering committee level of involvement

1. Introduction in this case is taken to mean the “logical element or segment of

[the organization] – such as accounting, production, marketing,
Effective management of organizations calls for effective etc. – representing a specific business function and a definite
management of its projects (Grundy, 2000). This includes projects place on the organizational chart, under the domain of a
external to the organization, in which case they are mostly revenue manager … [a]lso called department, division, or a functional
generating projects, and internal with the purpose of improving, area” (Business Dictionary, 2012).
structuring and involving processes which leads to better internal The paper will explore, through the literature and from
efficiency and external effectiveness and success (Artto and primary empirical data, the relationship between the organiza-
Dietrich, 2007). tional design and the effective management for the project
This paper considers the influence of project portfolios within portfolios which leads to their success. The authors posit that
organizations and their extensions, represented by project depart- the selection processes for managing the constituent projects in
ments, standalone portfolios and/or business units. A business unit a business unit have a significant role in the success of the
business and the overall success of the organization in realizing
its strategic intent.
⁎ Corresponding author at: U.A.E. Dubai, P.O. Box 3020.
Previous studies have looked at the success of standalone
Tel.: + 971506668570x971505932255.
E-mail addresses: yacoub.petro@mwhglobal.com, projects. For example, Besner and Hobbs (2006) and Besner
yacoub_petro@hotmail.com (Y. Petro), paul.gardiner@manchester.ac.uk and Hobbs (2008) looked at practices which enhance the
(P. Gardiner). success of projects, particularly the tools and techniques used in

http://dx.doi.org/10.1016/j.ijproman.2015.08.004
0263-7863/00/© 2015 Elsevier Ltd. APM and IPMA. All rights reserved.

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
2 Y. Petro, P. Gardiner / International Journal of Project Management xx (2015) xxx–xxx

different management practices and different stages of the nature; but it is their strategic direction and objectives that gets
project lifecycle. Morledge et al. (2006) linked project success them into the portfolio and keeps them inside the portfolio. The
to the internal and external procurement strategies applied to portfolio manager's responsibility lies in deciding which set of
them. projects makes best fit for the portfolio (Lycett et al., 2004).
It was not until recently that researchers started looking at Organizations aim to build a solid and reliable backlog
the effective management and the success of project portfolios that constitutes carefully selected projects. The perfect balance
and how that reflects on the business. Beringer et al. (2012) of such a project pool reflects the technological capabilities
looked at the filtration process; Patanakul (2015) looked at the and the investment needs that are tuned into the organization's
attributes of effectiveness for portfolios conducting a qualitative resources and processes (Archer and Ghasemzadeh, 2007;
approach to define effectiveness; Unger et al. (2012) looked at the Cooper et al., 2000; Wheelwright and Clark, 1992). The
appropriate timing to terminate projects and the positive effect difficulty in maintaining this balance stems from the wide
that leaves on effectiveness and strategy accomplishment; Jonas range of possible project combinations which form a portfolio
et al. (2013) looked at success factors and how they are linked to under organizational structural and other constraints. Such
the quality of management represented in “information quality, constraints could be represented by resources, technology, and
cooperation quality and resource allocation quality”; Voss (2012) the organizational capabilities which can stand between the
looked on the customer integration and the success of portfolios; organization and its desire to align with innovative and often
Martinsuo (2012) summarized more than 22 relevant recent inter-sectorial opportunities.
research papers which covered research conducted on portfolios in According to Reyck et al. (2005), the effective management
the era covered between 2006 and 2013. of the various constraints can lead to a solid and effective
No research to date has looked into the organizational elements portfolio with fewer project issues. It can improve financial
and tested them against the success of project portfolios or the behavior and risk management while ensuring the accountabil-
effectiveness of their management — which is the intention of ity of project selection. The research by Reyck et al. (2005, p.
this paper. Similar research was conducted on the project 525) highlights the “strong correlation between … increasing
management field previously as carried out by Gray et al. adoption of PPM processes and a reduction in project related
(1990), Gobeli and Larson (1985) and Lechler and Dvir (2010). In problems … and [increase in] project performance”.
their research, they broke the organizational structure down into Effective portfolio management is carried out by the app-
different forms and attributes in a bid to correlate them to individual lication of carefully designed set of processes with the intention
project success. Our research extends the role of organizational to achieve the overall growth and success of the organization
structure to success at the portfolio level. (Levine, 2005). Dye and Pennypacker (1999) defined portfolio
To achieve sustainable growth for projectized organizations, management as the “art and science of applying a set of know-
the sole management and consideration of projects in isolation ledge, skills, tools and techniques to a collection of projects in
from each other may not be the answer. Managing projects without order to meet or exceed the needs and expectations of an
having an overview of the portfolio of projects in the business organization's investment strategy”. Jeffery and Leliveld (2003)
is generally rebuffed by scholars and practitioners alike (Muller proposed a framework for the periodic review of projects to better
et al., 2008; Sanchez and Robert, 2010). The surge of interest optimize and balance the portfolio. Such a framework ensures the
in program and portfolio management is a further indication that alignment of the portfolio with the overall strategy.
projects warrant combined and collective consideration in their Portfolio failures have variously been attributed to poor strategic
management as a legitimate part of the portfolio, which will management (Matheson and Matheson, 1998), lack of involve-
ultimately enhance the efficiency of the business where the ment from business leaders (Kebdall & Rollins 2003), and
portfolio resides and help achieve the wider strategic intent of the wrong team skill set in designing and managing the portfolio
the parent organization. (Jeffery and Leliveld, 2003). The lack of portfolio management
The research presented in this paper concerns the factors leads to poor control and coordination between projects, conflicting
which enhances the effectiveness of portfolios and leads to their objectives, un-met deadlines, resistance to change, and most im-
success. In particular, we try to establish a link between the design portantly lack of benefit realization (Payne, 1995). McGrath and
of the organization and the success of portfolios. Hence the paper Macmillan (2000) add to this list: loss of revenue, non-efficient use
is focused on the following research question: of resources, loss of strategic alignment and an unbalanced set of
RQ: Can we establish a beneficial link between the organiza- projects within the portfolio.
tional structure/design on the one hand, and the effectiveness of The literature on portfolio management is linked to the literature
project portfolio management and the success of the portfolio on on benefit management. The realization of project or organizational
the other hand? envisaged benefits can be achieved through implementing
portfolios successfully. The ultimate purpose of delivering projects,
2. Project portfolio management (PPM) programs and portfolios is to benefit the organization with their
output. Benefits can be utilized as a measure to determine the
A project portfolio is an assortment of projects managed strategic effectiveness of the portfolio through examining the
collectively to achieve the benefits of the portfolio and to expected values of their constituent projects (Patanakul, 2015).
realize the overall strategy of the organization. This assortment Benefits may be confused with the created project
does not necessarily have to encompass projects of a similar deliverables and thus may be poorly measured or managed.

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
 Y. Petro, P. Gardiner / International Journal of Project Management xx (2015) xxx–xxx 3

Thiry (2007, p. 124) notes that it is a common “mistake to Patanakul (2015) raised the question in this research,
consider project deliverables as measures of benefits … it is the and invited future studies, to investigate the possibility that
impact of the deliverables on the organization, not the PPM effectiveness could act as a mediator for portfolio success.
deliverable itself, that constitutes the benefit”. We assume in our research that the success of a portfolio is
In this regard, benefit management could be used as a tool analogous in structure to Serrador and Turner's definition for
for prioritizing projects within the portfolio when resources project success. In this case the success of a portfolio would
are deemed insufficient (Levine, 2005). Projects within the follow effectiveness. PPM effectiveness and the success of the
portfolio could be prioritized on the basis of achieving the portfolio are two sides of the same coin with effectiveness
ultimate benefits of the organizations, such as ROI, strategic leading to success and/or vice versa — i.e., a successful port-
alignment and benefit prioritization. In this perspective, it can folio is a product of the effective management of the portfolio.
be seen that managing benefits appropriately will definitely We base our “effectiveness leading to success” assumption in
contribute to the success of the portfolio and the ultimate this regards on the underlying belief that organizations design
success of the organization. their strategies to be market competitive and successful.
Scholars prior to Patanakul (2015) research contributed
3. PPM effectiveness and portfolio success to the understanding and practice of project portfolio manage-
ment effectiveness. Sanchez and Robert (2010) linked effec-
With the introduction of project portfolio management, the tiveness and measured it against the accomplishment of the
significance of managing a single project with the aim of a organization's vision and mission statement. Artto and Dietrich
short term success started to seem less meaningful (Muller et (2007) emphasized on the strategic alignment with the organ-
al., 2008; Sanchez and Robert, 2010). Munns and Bjeirmi (1996) izational goals and benefits, an approach which has been reused
and Cooke-Davis (2004) studied the concept of long term project by Patanakul (2015) in measuring the strategic attributes of
success and linked that to achieving the benefits of the organization. effectiveness. Haponava and Al Jibouri (2009) used financial
This new concept – unlike short term success – considers measures along with project short term success factors. Another
achieving the overall business strategy (Artto and Dietrich, 2007), approach, by Muller et al. (2008), was based on the identifi-
which by other means looks into the health and sustainability of the cation of three indicators to measure the portfolio management
portfolio as a measurement of its effectiveness. performance and effectiveness: (1) achieving results, (2) achiev-
Serrador and Turner (2015) distinguished between “project ing purpose and (3) balancing priorities, and the researchers
success” on the one hand and “project efficiency” on the other indicated some means of measurement as presented in Table 1.
hand. Project success, in their definition, apart from being of The work of Martinsuo and Lehtonen (2007) linked portfolio
a short term or of a long term nature, concerns realizing the success with the average success of projects within the organ-
benefits set forth by the organization and the effectiveness of ization, the success of those projects are measured against long
the business model in achieving the overall enterprise goals. term and short term success factors. Interestingly, their research
Project efficiency on the other hand concerns the efficient revealed that single project management success is not sufficient
utilization of the project management tools and techniques, to measure portfolio PPM effectiveness since a project evaluation
and harnessing them appropriately to enhance the chances of is usually carried out apart from the portfolio.
project success. In this regard, Serrador and Turner (2015) An earlier set of scorecard-type measures proposed by
managed to establish a positive correlation between efficiency Cooper et al. (2002) comprised four dimensions for measuring
and success. and defining portfolio success: (1) the average success of
The effective management and/or success of project port- projects, including customer satisfaction (Pinto and Prescott,
folios are exceptionally important as they reflect the investment 1988; Shenhar et al., 2001), (2) the ability to understand the
the organization is pursuing (Project Management Institute, 2008). market in relation to the available technical capabilities within
Project portfolio management effectiveness in this perspective has the organization, (3) the organization's ability to enforce strategic
been researched by Patanakul (2015). He used a qualitative alignment for all its projects and (4) the ability to balance the
method – by which he looked into four company groups in the portfolio expenditure. The later work of Meskendahl (2010)
areas of finance, insurance and telecommunications – to describe added to that: (5) the ability to achieve economic success of the
effectiveness. Based on his research he put together the following
definition for PPM effectiveness:
Table 1
The organizational capability to 1) form a project portfolio Portfolio management performance and effectiveness indicators.
such that the portfolio aligns with the organization's strategic
direction, is adaptive to the internal and external changes, and Muller et al. (2008).
contains projects with high perceived value or benefit, and 2) Indicator How to measure it
manage the portfolio to promote project visibility, transparency Achieving results Customer satisfaction, financial results, scope, time, cost,
in decision making, and predictability of project delivery, in quality and user requirements
order to achieve project success, short and long term value or Achieving purpose Achieving the project and/or the program purpose
benefits, and integrity, cohesion, and morale of the project Balancing priorities Resource retention, timely accomplishments and stakeholder
satisfaction
community.

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
4 Y. Petro, P. Gardiner / International Journal of Project Management xx (2015) xxx–xxx

business, and (6) the ability to prepare for the future and to sustain operate. The earlier sections of this research highlighted the key
and ensure the longevity of the investment. role strategy plays in designing a portfolio selection model,
Economic success reflects the market success and the com- project delivery model and benefit realization framework. If not
mercial success (Shenhar et al., 2001). Market success is more handled with care, these models and frameworks could leave
relevant to the project's product success (Killen et al., 2008), the organization with a dichotomy that stands between the effective
and it refers to the achievement of the market objectives by delivery of its strategic intent and the incumbent organizational
those products or projects delivered thereby creating a unique structure (Giddens, 1984). Such a dichotomy could create a
market share. Commercial success refers to financial measures negative effect that reduces the efficiency of the operation (Thiry
such as ROI or NPV (Gardiner, 2005). and Deguire, 2007).
Preparing for the future refers to the ability to create future
opportunities for sustainable competitive advantage from the
work that has been carried out during the delivery process of the 5. Multidimensional approach for defining
current backlog of projects, and it is the ability to complement organizational structure
this work with the acquired – or emergent knowledge – that has
been developed during the course of executing projects (Gardiner A critical aspect of structure which impacts projects, programs
and Eltigani, 2014). and portfolios is the design of the authority relationships in the
Jonas et al. (2013) proposed a scale to measure portfolio organization. For example, the matrix structure represents a
success when they conducted the research to establish a link dynamic interaction between the functional manager and the
between management quality and success. Jonas et al. (2013) project manager within the organization; it simulates the dynamic
scale is somehow analogous to the previous researchers. Their environment in which the business operates. It is the extent of this
scale uses (1) average project success “to measure the general interaction and the degree of the authority given to either of the
success of the projects within the portfolio”, (2) synergies, managers that largely shapes the organization (Hobday, 2000;
which refers to the cross project coordination, and (3) strategic Larson and Gobeli, 1987, 1989).
fit with the organizational goals — strategic fit on the other Despite the importance of this well-known measure, it only
hand was attributed to effectiveness rather than success as represents a single dimension in our assessment of the effects
suggested by Patanakul (2015), which all confirms that the two of structure on an organization's performance. As such it
terminologies – effectiveness and success – lead to the same denotes a linear approach. Lechler and Dvir (2010) revealed
outcome and flows into business efficiency. There is no place weaknesses of this approach, particularly the difficulty of
for an unsuccessful but effective portfolio in practice. determining exactly where the authority indicator sits in the
Therefore, and in light of the above literature progression authority meter between different managers. For example,
and the different terminologies and scales used to measure staff authority, although assigned to them by the organization,
effectiveness and success; we propose a scale that measures is susceptible to change due to factors relevant to personality
PPM effectiveness. We split this scale into two subscales, one and leadership style (Mckenna, 2006). Subsequently, a true
which targets the effectiveness of the portfolio from a strategic balance of authority between the two managers may not be
perspective, and the other which targets the success element from achieved as foreseen by the organization, producing a
an average project success and client satisfaction perspective. weakness in the definition of the intended structure which
Hence we lay our first hypothesis as follows: leads to incorrect performance measurement (Lechler and
Dvir, 2010).
H1. There is a direct link between PPM effectiveness and
Lechler and Dvir (2010) overcame these limitations by
project portfolio success.
introducing the multidimensional approach. They explored
additional dimensions for defining the structure of organiza-
4. Organizational structure and strategy tions for the purpose of measuring the success of its projects.
These dimensions are: the project manager authority, the project
The structural design of organizations depends on the manager responsibility and the steering committee level of
organization's size, strategy, its use of technology, its surrounding support and influence.
environment and the types of power that reside within (Banner The project manager's authority refers to the influence the
and Gagne, 1995). These structural forms of the organization are project manager has over project decisions, budget (Hobday,
usually designed for its best interest and to facilitate the benefit 2000), employee matters (Katz and Allen, 1985) which can lead
realization and strategy achievement (Robbins and Judge, 2001). to some motivational aspects (Dunn, 2001), materials and other
Organizations frequently change their structure, reporting resources.
systems, merge and unmerge departments and change people as The project manager's responsibilities coincide with those
a reflection of strategy implementation and continuation. A good of a functional manager especially when recruited form the
strategy sets the organization for a long term growth and sustain- functional department. It may consist of technical responsibil-
ability, it helps craft the unique activities a business will do to ities in combination with the overall responsibility of delivery.
protect itself from imitators and other threats (Porter, 1996). Pure functional managers assigned to manage projects without
The above emphasizes the importance of the organization's going through proper training could expose projects to overruns
strategic intent in deciding in what form it shall choose to and scope creeps (Clark and Wheelwright, 1992).

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
 Y. Petro, P. Gardiner / International Journal of Project Management xx (2015) xxx–xxx 5

Steering committees overview projects overall performance

and set the general and strategic direction of all projects. They
connect with key stakeholders to ascertain the successful delivery
of projects, and strengthen the level of commitment. Researchers,
such as Porter and Kohanski (1981), emphasized the need to
involve steering committees during the life cycle of a project for
its successful delivery. The steering committee could consist of a
board of directors or it could be a single person with an ultimate
authority and interest for the project.
The research by Lechler and Dvir (2010) resulted in five
different organizational types or clusters which could have some
influence on project success. Each cluster represents a different Fig. 1. Graphical representation for the research established and proposed relationship.
combination of intensities based on the above multidimensional
approach:
also has a positive effect on the PPM effectiveness and success.
Cluster 1: project coordinator We therefore propose the below hypotheses:
Cluster 2: supervised project coordinator
Cluster 3: autonomous project manager H2. PPM effectiveness and/or success are enhanced when a
Cluster 4: supervised functional project manager steering committee (which could also be represented by
Cluster 5: autonomous functional manager. management support) overviews the projects within the portfolio.
H3. PPM effectiveness is enhanced when the project manager
Cluster 1 represents a project coordinator type of structure
has more authority and responsibility towards delivering his
with very low project and functional authority and responsibility
projects.
being recruited from lower level functional departments, steering
committee has low level of involvement if they ever existed H4. Portfolio success is enhanced when the project manager
in such types of organizations. Cluster 2 is similar in structure has more authority and responsibility towards delivering his
to cluster 1 with the exception of the full involvement of a projects.
steering committee. Cluster 3 constitutes higher power for project One more insight should be considered when dealing with
managers, but the steering committee gets very low level of the aggregation of projects within a portfolio; what makes a
involvement in projects. Cluster 4 and Cluster 5; the project single project a success does not necessarily constitute a success
manager is recruited form the functional department's senior for the overall portfolio. Lechler and Dvir, and others as discussed
staff, they both get higher levels of project and functional previously, established the strong relationship between the project
authority and responsibility related to either personnel, project or manager's authority and responsibility and the success of a single
functional. The only difference between those two structures is project, which we try to apply at the portfolio level (H3 & H4).
the level of involvement of a steering committee. However, what we try to establish and theorize here is that an excess
Lechler and Dvir (2010) provided enough evidence to of authority over one or a handful of projects may well sabotage and
strengthen significantly the amenability of this approach to better impede the success of other projects within the same portfolio. This
analyze results when correlating research constructs with such could happen when each manager uses their authority to harness the
organizational phenomena. organizational resources to serve the purpose of one project only
(i.e., theirs), without considering the overall goal of the business or
6. Conceptual framework: organizational structure and the portfolio.
PPM effectiveness and success A steering committee, or a management support with a
significant level of involvement, could come into play to streamline
The organizational strategy has a significant effect in shaping the above mentioned relationships and organize the use of organ-
up the organizational structure (Mintzberg, 1990). This same izational resources and maintain other balances and prioritizations
strategy has the key role in determining the business model within the portfolio. We noticed that the terminologies “steering
and the project portfolio structure. Fig. 1 below depicts these committee” and “management support” were used alternatively in
relationships. The solid line in the figure represents the relation- the literature in a way which ultimately revolved around manage-
ship between the structure of the organization and the success of ment support.
its projects — an already established relationship as discussed in Based on the above, we therefore theorize that the effect of a
Gray et al. (1990), Gobeli and Larson (1985) and Lechler and project manager's authority and/or responsibility on PPM
Dvir (2010). The dotted line on the other hand represents the effectiveness and/or success depends positively on the extent of
proposed relationship as suggested and theorized in this research the management support/steering committee extent of involve-
paper, a relation which we intend to test. ment. Hence we propose the following hypothesis:
In light of the above, and in combination with the cluster
analysis discussed in previous sections, we envisage that the H5. PPM effectiveness is positively affected by the increased
organizational structure which has a positive effect on projects, project manager authority and/or responsibility provided there

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
6 Y. Petro, P. Gardiner / International Journal of Project Management xx (2015) xxx–xxx

is also an increased level of involvement from management in complete financial disclosure from the test subjects; informa-
the form of either “support” or a “steering committee” level of tion which was considered very difficult to get and gather
involvement. accurately for the purpose of this research.
H6. Portfolio success is positively affected by the increased
project manager authority and/or responsibility provided there 8. Population framework
is also an increased level of involvement from management in
the form of either “support” or a “steering committee” level of The population of this research covered project-based organ-
involvement. izations which host projects of internal or external scope. The
Overall, the hypotheses are summarized in Fig. 2 as follows: unit of analysis used in this paper consisted of project portfolios
represented by either a portfolio management office, program,
7. Research design and methodolgy business unit, department of projects or any other similar type
of portfolio structure.
A post-positivist approach and a quantitative deductive A scale to measure the above mentioned constructs and
approach were conducted in this research to test the above their variables was developed out of 34 question items — as
hypotheses. The selection of this particular approach is commen- presented in the Appendix. The questionnaire was distributed
surate with the findings of Ketchen et al.'s (1993) research of using various methods which vary between direct approach,
organizational performance. The post-positivist approach has direct phone calls, snowball effect, distributing via emails and
been accepted by the researchers as a bid to reflect the fact that not via professional websites to either direct or indirect contacts. It
all research subjects can accept full objectivity; some perception is expected that the survey has initially reached out to over 200
would infuse subjectivity into the research of what may resemble potential respondents from various companies and portfolio
phenomenology. disciplines. The geographical coverage for the research is
A set of variables were concluded from the findings of the expected to have covered mostly Middle Eastern geographies
literature review and then presented in the inferential statistics. with possibility of some international geographies due to the
The findings of the literature review allowed us to categorize snowball effect which took place.
those outcomes into two major constructs; one contains the The number of the respondents to the survey ended up at 118
organizational structural variables as adopted by Lechler & (approximately 59% of return). The 118 responses were filtered
Dvir's multidimensional approach. The second construct repre- out and reduced to 67 clean responses; i.e., reliable and relevant.
sents the PPM effectiveness and success in one global factor as The criteria used for filtering responses entailed mostly removing
established in the literature. incomplete surveys (22%), aggregate of similar portfolios using
It is to be noted in this regard that the authors of this research the IP address of the online survey as an indicator per respondent
carried out a pilot study on a smaller numbered sample by (15%) and unclear and inconsistent data (6%).
which the economic success was excluded due to lower The participants to the survey were selected from senior staff
reliability values. Economic success proved to require some with sufficient tenure within the organization to guarantee a
further critical considerations with additional deep research and good understanding of its operation. The data was collected

Fig. 2. Conceptual framework.

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
 Y. Petro, P. Gardiner / International Journal of Project Management xx (2015) xxx–xxx 7

professionally ensuring an ethical theme around the research Table 3

process, the participants contributed by their own free will, and Factor analyses for the project portfolio success construct — average project success
and client satisfaction.
they were assured about the confidentiality and the anonymity
of their and their employer's identity. Item/variable Factor 1 Factor 2
The online survey used a five-point Likert scale ranging Average project success 1 0.726
from level 1 “Strongly Agree” to level 5 “Strongly Disagree”. Average project success 2 0.829
Average project success 3 0.777
The question items were tested against Cronbach's alpha
Client satisfaction 1 0.926
reliability. A bivariate correlation analysis and a linear regression Client satisfaction 2 0.894
analysis were used to explore the type of relationship between the
variables and the level of impact they have on PPM effectiveness
and success. Finally, a moderation test was conducted to explore manner allowing a snowball effect. The following key demo-
the effect of “steering committee level of involvement” on graphics were noticed:
relationships established by this research.
The survey consisted of the following parts: • Male respondents (79%), female respondents (21%).
• Age: 30–39 years (49%), 40–49 years (27%), 50–59 years
1. Demographic seven general questions. (14%), others (10%).
2. Four questions to measure the project manager authority • Current position in the company: sr. technical staff (49%),
within the tested organization. sr. management staff (24%), other management and
3. Four questions to measure the project manager responsibility technical level (27%).
within the tested organization. • Years of experience: 11–15 years (34%), 16–20 years
4. Seven questions to measure the management support and (19%), above 21 years (25%), others (22%).
level of involvement of a steering committee within the tested • Years in the same company: 1–5 years (46%), 6–10 years
organization. (25%), 11–15 years (15%), others (14%).
5. Three questions to measure the general and average project • Surveyed company disciplines: the survey mostly covered
success within the tested organization — part of portfolio service firms, engineering firms, construction firms, IT,
success measurement. consultancy firms and environmental firms.
6. Three questions to measure the general customer satisfaction
within the tested organization — part of portfolio success 10. Inferential statistics
measurement.
7. Four sub-questions under one question to measure the 10.1. Factor analysis and reliability Cronbach's alpha
“preparing for the future” variable within the tested
organization — part of PPM effectiveness measurement. A factor analysis was conducted for the selected variables to
8. Four sub-questions under one question to measure the constitute the constructs of organizational design, portfolio
“portfolio balance” variable within the tested organization — success and PPM effectiveness.
part of PPM effectiveness measurement. The eight items which reflect the project manager's authority
9. Three questions to measure the strategic fit of those projects and responsibility were loaded on one factor during the Varimax
and the portfolio with the organization's strategic direction — rotation. Those items were reduced to five. The resultant factor
part of PPM effectiveness measurement. resembled the project manager's influence within the organiza-
tion and hence was named as such. The steering committee level
9. Descriptive statistics of involvement loaded successfully on one factor after being
reduced by three items to reflect the highest Cronbach's alpha as
The survey was distributed amongst senior staff of the discussed later. The factor analysis which was conducted on the
surveyed organizations and requested to be carried out in such a organizational design construct is presented in Table 2.

Table 4
Factor analyses for the PPM effectiveness construct — organizational
Table 2 preparedness (organizational and resources) and strategic alignment.
Factor analyses for the organizational design construct — project manager
Item/variable Factor 1 Factor 2 Factor 3
influence and steering committee level of involvement.
Preparing for the future 1 0.907
Item/variable Factor 1 Factor 2
Preparing for the future 2 0.865
Authority 1 0.646 Preparing for the future 3 0.714
Authority 4 0.739 Preparing for the future 4 0.92
Responsibility 1 0.551 Strategic alignment 3 0.74
Responsibility 3 0.757 Balance strategic priorities 2 0.765
Responsibility 4 0.511 Balance strategic priorities 3 0.897
Steering committee 2 0.625 Balance strategic priorities 4 0.629
Steering committee 3 0.792 Strategic alignment 1 0.625
Steering committee 6 0.743 Strategic alignment 2 0.806

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
8 Y. Petro, P. Gardiner / International Journal of Project Management xx (2015) xxx–xxx

The variables which constitute the project portfolio success

global
factor
PPM
loaded successfully on two factors as shown in Table 3 without

.967 ⁎⁎ 1
any reduction in the number of items.

effect.
PPM
PPM effectiveness variables loaded successfully as shown in
Table 4. The “preparing for the future” variable loaded on two
factors; one calls for the organization preparedness from seizing

alignment (influence + steering) portfolio

success

.751 ⁎⁎
.894 ⁎⁎
Project
market opportunities and enhancing their backlog of projects on
the one hand, and the other calls for resource preparedness in
term of enhancing skills and capabilities for the work force on
the other hand. The items relevant to strategic alignment of
projects loaded successfully under one item. The loading which
took effect under PPM effectiveness resembles in a way

.501 ⁎
.462 ⁎
Steering committee Average project General client Prep. of the Prep. of org. Strategic Design
Patanakul (2015) definition for this construct.

0.318
We tested the reliability and internal consistency for all the
items and newly loaded factors using the Cronbach's alpha test,

.748 ⁎⁎
.862 ⁎⁎
.872 ⁎⁎
as shown in Table 5, and we found all the items constituted

.515 ⁎
high internal consistency of 0.7 and above. The constructs
themselves were also tested against their internal consistency
and found to be reliable.

organization resources

.406 ⁎⁎
.660 ⁎⁎
.600 ⁎⁎
.414 ⁎
0.204
10.2. Correlation

.415 ⁎⁎

.392 ⁎⁎
.604 ⁎⁎
.557 ⁎⁎
Table 6 presents the bivariate correlation carried out using

0.252
0.283
two tails to allow for more possible options of correlation. It
can be noticed from the presented model of Table 6 that those
established relationships support most of the proposed hypotheses.
satisfaction

.423 ⁎⁎

.729 ⁎⁎

.752 ⁎⁎
.638 ⁎⁎
.750 ⁎⁎
The model supports H1 with the strong and highly sig-

.253 ⁎

0.403
nificant correlation of r = + 0.751 at sig = 0.001, which reflects
the hypothesized relation between PPM effectiveness and
portfolio success. This confirms the importance the effective
alignment of projects with the organizational strategy (PPM
.461 ⁎⁎

.389 ⁎⁎
.314 ⁎⁎

.592 ⁎⁎

.932 ⁎⁎
.665 ⁎⁎
.799 ⁎⁎
success

effectiveness) has on the success of the portfolio, it also em-

0.181
phasizes on the importance of communication between the
strategic level of the organization and the project managers.
The model could not find a link between the “steering
level of invol.

committee level of involvement” and the portfolio success, nor

.575 ⁎⁎

there was a link found with the PPM effectiveness. Thus, H2 is

− 0.162
− 0.146

− 0.024
0.174

0.005

− 0.178
0.054
− 0.032

not supported by the research. We also could not find a link

between the “steering committee level of involvement” and the
project manager's influence. It was conceptualized though that
a steering committee may have a moderation effect on the
.354 ⁎⁎
.358 ⁎⁎

.390 ⁎⁎

.614 ⁎⁎
.699 ⁎⁎
.409 ⁎⁎
.555 ⁎⁎
.584 ⁎⁎
manager's

relationship between the project manager's influence and the

⁎⁎ Correlation is significant at the 0.01 level (2-tailed).
⁎ Correlation is significant at the 0.05 level (2-tailed).
influence

.244 ⁎
− 0.183

portfolio success and PPM effectiveness — H5 and H6. This

Project

Organizational design (influence + steering)

Steering committee level of involvement

Table 5
Reliability analysis.
Strategic alignment of the projects
Preparedness of the organization

Variable/construct Cronbach's alpha

Project manager influence 0.70
Project manager's influence

Steering committee level of involvement 0.82

Project portfolio success
Average project success

Average project success 0.72

Correlation analysis.

the org. resources

client satisfaction

Customer/client satisfaction 0.84

PPM effectiveness
PPM global factor
Preparedness of

Preparing the org. for the future 0.77

Preparing org. resources to the future 0.90
Strategic effectiveness 0.85
General
Table 6

Project portfolio success 0.77

PPM effectiveness 0.81

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
 Y. Petro, P. Gardiner / International Journal of Project Management xx (2015) xxx–xxx 9

relationship of moderation will be put into test later in this 10.4. Moderation test
paper.
PPM effectiveness and portfolio success were found to have We conducted a moderation test to examine what effect a
a strong correlation with their constituent global construct at steering committee has on the relationship between the project
r = + 0.894, sig = 0.001 and r = + 0.967, sig = 0.001 respec- manager's influence and the portfolio success, followed by a
tively. This global construct – referred to as PPM global factor similar test using the PPM effectiveness with influence.
in Table 6 – with all its constituent variables resembles the In order to conduct this test, we split the full data set into
business efficiency of the project-based organization. There- two sets; one set comprised low levels of involvement from the
fore, this contributes to generalizing the relationship of the project steering committee, and the other comprised data which is
manager's influence on business efficiency as established with attached to moderate to higher levels of involvement. We used
high significance and moderate to strong correlation at r = + 0.584 a simple scatter plot supported with a trend line to simulate the
with sig = 0.001. correlation between the project manager's influence in the
The project manager's influence on the other hand was organization and portfolio success at low levels of involvement
found to have a highly significant and moderate correlation from the steering committee — Fig. 3 upper. Similarly – Fig. 3
with both the portfolio success and the PPM effectiveness at lower – we plotted the same relationship under higher levels of
r = + 0.409, sig = 0.001 and r = + 0.555, sig = 0.001, which involvement.
supports both H3 and H4. The project manager's influence Fig. 3 shows a moderation effect is taking place with
was found to have a high significant and moderate correlation the steering committee level of involvement influencing on
with all the constituents of the two constructs of business the relationship between the project manager's influence and
efficiency. the portfolio success, especially at higher levels of such an
involvement — i.e., it can be seen that at higher levels of
involvement the portfolio success scored above 15 at higher
10.3. Regression
influence data points, while it scored below 15 at lower levels
of involvement using the same influence data points. Similarly,
Organizational design factors were regressed against port-
it can be noted that at lower influence data points both portfolio
folio success, PPM effectiveness and business efficiency as
success results were comparable when the involvement was
represented by the result of global PPM effectiveness discussed
either on the low or the high side.
earlier — model presented in Table 7. The F-test shows a
The results of the moderation test as presented in Fig. 3
significant model for those three factors at (ρ-value b 0.03) in
provide enough support for H6.
all cases and an adjusted coefficient of determination R2 of
We conducted a similar test using the same methodology to
0.225, 0.267 and 0.203 respectively. The coefficient of
cater for the influence involvement has on the relationship
determination concludes that 20.3% to 26.7% of the variances
between influence and PPM effectiveness on the other hand, but
in the portfolio success, PPM effectiveness and business
we found no moderation effect of any such type. The relevant
efficiency could be explained — and in fact is attributed to
simple scatter plot – not presented here – showed no pattern of
the project manager's influence in the organization. Given this,
such support. Hence we were unable to support H5.
along with the correlation results presented in Table 6, it can be
concluded that H3 and H4 are further supported.
The β values of the regression model are being highly 11. Discussion and research implications
influenced by only one variable across all factors. This variable
is the project manager's influence (authority and responsibility Organizational structure and design has proven to have a
combined) as part of the design of the organization. This single direct effect on the success of the portfolio and PPM effectiveness
variable managed to gather β slope values of 0.552, 0.585 and — both combined and coined as ‘business efficiency’ for the
0.598 for the portfolio success, PPM effectiveness and business project-based organization. The project manager's influence,
efficiency respectively, indicating the highest slope in the which is a result of combining the project manager's authority
model and producing the majority of the influence on those and responsibility towards project outcomes, represented an
portfolio elements. essential constituent to the organizational design in this paper as

Table 7
Regression analysis.
Regression equation F-value and sig. level Adjusted R2 β
1. Independent factors regressed 4.192 (0.030) 0.225 1. PM influence 0.552
against portfolio success 2. Steering committee 0.083
2. Independent factors regressed 5.005 (0.017) 0.267 1. PM influence 0.585
against PPM effectiveness 2. Steering committee 0.161
3. Independent factors regressed against 5.298 (0.014) 0.203 1. PM influence 0.598
overall business efficiency 2. Steering committee 0.077
(PPM global factor)

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
10 Y. Petro, P. Gardiner / International Journal of Project Management xx (2015) xxx–xxx

Fig. 3. Simple scatter – correlation between project manager's influence and portfolio success – at different steering committee levels of involvement.

shown by correlation. This influence was found to have a key direction. This alignment enhances the effectiveness of the
effect on the business efficiency of project-based organizations. portfolio and ensures that the portfolio will produce the desired
Higher levels of influence may have a positive effect on strategic outcomes. It was proven in this research that the effective
single project success, but this may not necessarily be applicable management of the portfolio, which can well be regulated by a
on the overall portfolio. Too much of authority may enhance the steering committee in some cases, has a strong positive effect on
success of a single project as proven by Lechler and Dvir (2010), the success of the portfolio.
but may result in seizing organizational, and other, resources The strategic direction of the organization plays a significant
under the project with the project manager who has the highest role in determining its structural design, while it plays as a key
authority, producing an imbalanced portfolio resourcing struc- contributor in selecting the projects within its portfolios. The
ture. A steering committee involvement comes into play to strategic direction of the organization strongly influences which
regulate this relationship for the betterment of the business. projects should go into the portfolio and which ones should stay
A steering committee could be involved at a strategic level outside. The structural design determines the level of influence
as well as at a project level, not only to regulate the use of the project manager has within the organization and the role of
resources, but to ensure that all the projects that reside within a steering committee and their level of involvement in implementing
the portfolio are in alignment with the organizational strategic strategy and regulating work. A consistent approach amongst all

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
 Y. Petro, P. Gardiner / International Journal of Project Management xx (2015) xxx–xxx 11

such products of strategy should be carefully considered to prevent structure to consider different phases of portfolio delivery/
any dichotomy that may occur amongst them all, which may portfolio life cycle? What other products of strategy do we need
prevent achieving the organizational results represented by the to investigate more which links to business efficiency?
success of the portfolio and overall efficiency. Therefore, we suggest the inclusion of the following future
research agenda to augment our study:
12. Conclusion
1— Review of portfolio management articles related to specific
The purpose of this paper was to examine the factors that affect industries to see how they relate to our study and gauge any
the success of project portfolios and the effectiveness of project relevance to portfolio effectiveness in general.
portfolio management in the project-based organization — 2— Exploration of the relationships of portfolio management
all combined to produce an efficient business. The inspected and stakeholder management.
independent factors comprised of the project manager's author- 3— Study the effect of stakeholder and stakeholder management
ity, responsibility and a steering committee level of involvement. on portfolio effectiveness.
The research results indicated that a project manager's degree 4— Study other factors and prepare a robust methodology for
of influence in the organization, translated into his authority evaluating the economic success of organizations and
and responsibility, has a positive effect on portfolio success, does that link to business efficiency.
client satisfaction, strategic alignment, preparedness and PPM 5— Explore more portfolios and evaluate their effectiveness
effectiveness. in different sectors and industries other than the ones
This study proved, and further established some of the investigated in this paper.
components of PPM effectiveness, which coincide with Patanakul
(2015) research. The components of PPM effectiveness are
Conflict of interest
governed by the strategic alignment of projects. Strategy is
supported by the organizational preparedness and organizational
The authors declare that there are no conflict of interest.
resource preparedness for the future — preparedness of the
organizations is commensurate with it being “adaptive to the
Appendix A. Used questionnaire
internal and external changes” (check Patanakul's definition of
PPM effectiveness).
General
This paper suggested six hypotheses of which four were
supported by the outcomes of this research. The research 1- Age
supported H1 which hypothesized establishing a relationship 2- Sex
between PPM effectiveness and portfolio success. H3 and H4 3- Level in the organization
were strongly supported by regression and correlation with the 4- Work experience
establishment of a strong relationship between the project 5- Work tenure
manager's influence within the organization and both PPM 6- Projectized organization?
effectiveness and portfolio success. Finally, H6 was supported 7- Industry
when the above mentioned relationship under H4 was put under a Project manager authority
moderation test with the moderator represented by the “steering
8- A project manager in your business unit has an exclusive
committee level of involvement”.
authority to make all the necessary decisions to achieve
This study has provided a review of the history, theories,
the goals of the projects
models and research found in the literature. It indicated there is
9- A project manager in your business unit has a significant
much to do in developing a better understanding of the expansion
influence on deciding the type of rewards (such as bonus
of portfolio management effectiveness and the development of
and promotion) given to the project team
relevant literature within and between industries.
10- A project manager in your business unit has an exclusive
authority over the project team regarding technical matter
13. Looking towards future literature and research
11- A project manager in your business unit has a significant
influence and input when assessing the project team
Portfolio management and its effectiveness need to be
performance
viewed within the context of the organization and its strategic
direction. The organizational operating environment and its Project Manager responsibility
resource capabilities with their technical exposure can help 12- A project manager in your business unit usually carries
ensure that the portfolio planning and delivery are aligned with out (and is assigned) technical activities during the
strategy. This all feeds in the envisaged organizational design course of any project
which is needed to manage projects and portfolios. 13- A project manager in your business unit has a high
We concur more specifically, that future literature and research ranking in the technical department other than a project
need to gauge other methodologies to assess some or more of the management department
constructs which we have assessed herein. Do we need further 14- A project manager in your business unit is fully
evaluations on the portfolio environment, or the organizational responsible for his assigned projects

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
12 Y. Petro, P. Gardiner / International Journal of Project Management xx (2015) xxx–xxx

15- When a project goes wrong in your organization, the 31d— Resource constraints (i.e., conflicts between resources
project manager gets most of the blame than the used on different projects)
technical staff who are implementing the project Strategic fit
Steering committee level of involvement
32- Our project portfolio is aligned with the organization's
16- Top management interferes in the details of any ongoing
future
project
33- The firm strategy is implemented by our project portfolio
17- The major and very key project decisions are supervised by
34- The allocation of resources to projects reflects our
a committee that is formed mainly from the top
strategic objectives
management
18- In my organization there is a steering committee (or so
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management and its success — a conceptual framework. Int. J. Proj. Manag. developed models and processes that assist in better managing projects. Yacoub
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portfolio management performance in different contexts. Proj. Manag. J. 39 He has written over 70 journal articles and international conference papers in
(3), 28–42. areas relating to strategic project management and has authored a textbook on
Munns, A.K., Bjeirmi, B.F., 1996. The role of project management in achieving project management for Palgrave Macmillan. Professor Gardiner is a teaching
project success. Int. J. Proj. Manag. 14 (2), 81–87. fellow at Nottingham Business School and a visiting academic at the University
Patanakul, P., 2015. Key attributes of effectiveness in managing project of Manchester.
portfolio. Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.01.
004 (in press available online 24–January–2015).
Payne, H., 1995. Management of multiple simultaneous projects: a state-of-the-
art review. Int. J. Proj. Manag. 13 (3), 163–168.

Please cite this article as: Y. Petro, P. Gardiner, 2015. An investigation of the influence of organizational design on project portfolio success, effectiveness and business
efficiency for project-based organizations, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2015.08.004
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