Embracing Contemporary Project Management As A Competitive Advantage For Control Systems Vendors in The Process Industry
Embracing Contemporary Project Management As A Competitive Advantage For Control Systems Vendors in The Process Industry
Embracing Contemporary Project Management As A Competitive Advantage For Control Systems Vendors in The Process Industry
Kwek Keong SIEW MEngM, MBA Members of PMI (USA), IPMA (Europe) and CPMC (China)
President, EPMP Consulting Private Limited
No.1 Irving Road #03-01 Neo Industrial Building Singapore 369520
Email: [email protected]
KEYWORDS
ABSTRACT
With the rising impacts of globalization and stagnant economy since the past decade, Control Systems
(CS, here-in-after) vendors are beset with the toughest business issues in the process industry and
exacerbated by the long absence of significant breakthrough in CS technologies; as compared to that of
the Information & Communication Technologies (ICT, here-in-after) albeit they share many
technological resemblances and the way in which businesses are conducted. This paper hopes to bring
lights to CS vendors on how they should embrace contemporary project management as a competitive
strategy to sail through the stormy weathers. The data analysis in this research manifests a wide
disparity on the perception of project management practices existed between the CS vendors and ICT
vendors among other things obviously that the CS vendors are lacking far behind the ICT vendors in
pursuing project management excellence. The proposition also touches on a holistic approach of
Enterprise Project Management Capability Framework (EPMCF) for companies to deploy by making
changes to their organizations while competing in a global environment; else to face with the prognosis
of merger & acquisition. As proposed by the Author, EPMCF is unprecedented and a comprehensive
framework in the purview project management aims at guiding organizations moving towards project
management excellence within the shortest possible timeframe. EPMCF encompasses three critical
success factors for todays organizations, namely the Project Manager Capability Model (PMCM),
Project Management Capability Systems (PMCS) and Organizational Project Management Capability
Model (OPMCM) to challenge todays dismal business climate from a broader perspective.
In recent years, Control Systems (CS) vendors have undergone the most difficult business situation at
the time of rapid globalization. CS projects secured nowadays are at rock bottom prices with shrinking
profit margins so as to keep business going while hoping for an economic recovery; customers have
become more discerning, demanding and shrewd on capital expenditures; the industry has long been
searching for innovations in CS technologies without a great success. The industry is caught in the
dilemma and expecting a major make over to arrive, but meanwhile what shall they do?
Based on the report of Total Automation Business for the Process Industries Worldwide Outlook,
Market Analysis and Forecast through 2007 published by the ARC Advisory Group in 2003, it states
that After enjoying a period of solid economic growth, the global economy went into a tailspin in
2002. As a result, bleak market sentiments affected the investment climate throughout the year. The
process automation market, whose resilience is directly related to the prosperity of the industry and
health of the economy, therefore experienced little growth.. From the technology perspective, the
automation market is at a crossroads and is waiting for the next innovation that will provide it with the
impetus needed to sustain the robust growth experienced during the advent of digital control systems.,
While a few automation products will experience better than average growth, as a whole, the
automation market continues to suffer from low growth. Hardware growth, a major component of
automation revenues, is rapidly declining because of fierce competition and declining hardware cost.
However, software and services remain bright spots. Most of the growth in the automation market
today is coming from services, and many of these services are directly related to the formation of
collaborative partnerships between suppliers and users. (Himanshu Shah, Larry OBrien, 2003)
Today, the concept of project management is ubiquitous in business activities and many CS vendors
claim to have practiced project management by setting up a project management function in their
organizations. Paradoxically, they fall short in putting project management in a right perspective due
primarily to the limited understanding on project management that can bring tremendous benefits to
organizations. The key objective of this paper is to examine the current state of project management
practices across the CS vendors and recommending the contemporary project management as a
competitive advantage during the difficult times before the next business cycle recovers.
Hitherto, Oil is one of the most critical commodities in modern civilization and also in the process
industry as oil affects everybodys life and other industries immensely. Oil products remain to be the
dominant source of energy for power generation, land & sea transportations and aviations despite
alternative sources including the natural gas, fuel cells, solar, wind, hydro and thermo energies etc
were developed over the decades. Oil prices are resilient and subject to seasonal demands, economy
Process industry has been the traditional core market for CS vendors to spine off businesses by
providing products and services since a century back. The genesis of CS vendors started out by
offering instrumentation products and some had later expanded into CS with project services on
turnkey basis especially in the last two decades due predominantly to the booming outsourcing by the
oil companies and the EPC contractors. Sometimes, CS vendors support system integrators but on
other projects they may also compete with system integrators. The CS business landscape had indeed
come under some facelift in the past decade with mergers and acquisitions causing some legendary
brands evaporated over years from the automation and control marketplace. Nonetheless, these
activities were far from the strategic alliances in nature as in the oil industry and instead they focused
on producing healthy report cards on revenues and market capitalization. Currently, the CS market is
faced with intensifying pricing competitions, lacking innovative products and lethargic market
responsiveness. In the eyes of CS users that the CS technologies nowadays offer no product
differentiation from vendors, why would CS users pay more for the same solution? As such, CS
vendors should spare no effort to relentlessly evolve with innovative technologies, new business
strategies and bringing cost down in order to compete not only among themselves and possibly system
integrators, but also the potential threats from the ICT vendors in the impeding years as more and more
of ICT technologies will be embedded into CS technologies.
In the absence of research materials at hands and resources available to cover the wide array of subject
matter on project management practices of CS vendors; this paper targeted only the leading CS
vendors in the process industry by explicating the data collected and compared with that of the ICT
vendors. The five market leaders of CS vendors that were researched into included ABB, Emerson,
Honeywell, Invensys and Siemens; whereas the five leading ICT brands were the Cisco, HP, IBM,
Microsoft and Motorola.
The Project Management Institute (PMI) based in PA, USA was established in 1968 having current
memberships of 130,000 world-wide. The International Project Management Associations (IPMA)
based in Netherlands was established in 1965 having current memberships of 20,000 mainly in Europe.
They are the non-profit organizations and the impetus in cultivating project management competencies
by offering courses and certifications on project management on a global scale.
According to the definition by the PMI that project management is the application of knowledge,
skills, tools and techniques to project activities to meet project requirements, and Project
management is accomplished through the use of the processes such as initiating, planning, executing,
controlling and closing. The project team manages the work of the projects, and the work typically
involves competing demands for scope, time, cost, risk and quality; stakeholders with differing needs
and expectations; identified requirements (PMI/PMBOK, 2000).
The Project Management Body of Knowledge (PMBOK) of PMI focuses the nine knowledge areas
within the five project management processes of initiating phase, planning phase, executing phase,
controlling phase and closing phase. Whereas the concurrent nine knowledge areas include the Project
Integration Management, Project Scope Management, Project Time Management, Project Cost
Management, Project Quality Management, Project Human Resource Management, Project
Communication Management, Project Risk Management and Project Procurement Management. PMI
website offers wide ranges of information pertinent to project management.
Program management and portfolio management are the subsets of project management in this context.
In light of the difficulty to reach out to the targeted CS vendors for the purpose of collecting primary
data for analysis, this paper undertook an unorthodox approach by searching into the CS vendor
websites for primary data on project management and also associating them with PMI which is by far
the most dynamic global driver in project management activities. This was done basing on the logical
thinking that a CS vendor which emphases on project management would have reflected on its website
the related project management information for knowledge sharing with its staff, customers and
visitors; synonymous to showing its current product information over its website. While the
conventional approach of e-surveying or face-to-face interviewing tends to be untenable as the results
obtained through such means are likely to be ostensible by the professional image of CS vendors than
factual, hence contradicting their responses on data collections.
The search results obtained from the PMI website on CS corporate membership
ABB Emerson Honeywell Invensys Siemens
PMI Corp. >200 0 0 0 >500
Membership
Total items >700
Authors note: The comparative higher scores of some companies do not necessary implying better
project management practices and vice verse.
The search results obtained from the PMI website on ICT corporate membership
Cisco HP IBM Microsoft Motorola
PMI Corp. >200 2,462 5,241 >300 >500
Membership
Total >8,703
1) The CS vendor websites generated a total of 2214 items on PM verses 9066 items, or four times
less than that obtained from the ICT vendor websites. Apparently that the importance of project
management is being perceived and practiced vigorously by ICT vendors, as a result a much higher
organizational maturity level of project management than that of CS vendors despite of the
resemblance of technologies and business models.
2) The majority of CS vendors do not subscribe to PMI corporate membership apart from the two
European based CS vendors although there may be also PMPs as individuals within the CS vendors.
The fact that ICT vendors comprehend the vitality in associating with PMI to keep abreast with the
changing global project management developments. ICT vendors also embark on PMI initiatives such
as the OPM3 to benchmark their project management maturity level whereas many CS vendors appear
to be unaware of such initiative of PMI.
3) Project management methodologies are widely adopted by the ICT vendors due primary to the
shorter product cycle time where good project management practices are inevitable to gain first mover
advantage and market positioning. ICT vendors also put in measures to ensure their project managers
and organizational maturity geared towards project objectives via project deliverables to achieve
organizational goals. In fact, ICT vendor like IBM, are not only having project managers certified by
PMI as PMP, it further qualifies project managers under its own in-house intervention programs to
groom project managers. IBM and HP are topping the list of corporate memberships with PMI.
4) Generally, the magnitude of project management practices of CS vendors are trailing far behind the
ICT vendors despite the project management processes are identical from project inception towards
project closing throughout the project management continuum. The ICT vendors continued to proffer
advanced technologies and helping CS vendors to narrow the technological gaps.
In light of the ramifications of globalization, managing projects can no longer solely rely upon the
conventional wisdom of time, cost, resources and quality per se to achieve the targeted outcomes in
todays context. These days as projects are becoming more complex, diverse and adverse transcended
beyond the traditional boundaries of project management arising from the impacts of globalization,
apart from training and certifications of project managers, new paradigms should be sough from a
broader perspective to help companies compete in the global environment. Based on the extensive
research into the realm of project management augmented with more two decades of international
The PMCM comprises the three dimensions of PM Competency, PM Performance and PM Training &
Career Development.
Based on the Project Manager Competency Development (PMCD) Framework developed by Project
Management Institute (PMI) which indicates that competencies have a direct effect on performance,
and Competency is a term which is widely used but which has come to mean different things to
different people. It is generally accepted, however, as encompassing knowledge, skills, attitudes and
behaviors that are causally related to superior job performance (Boyatzis 1982). PMCD also cites the
performance-based approach to competence, which assumes that competence can be inferred from
demonstrated performance at pre-defined acceptance standards in the workplace as the basis for
Competency Standards Movement similar to that of the United Kingdoms National Vocation
Qualifications and the Australian National Competency Standards Framework (PMI/PMCD, 2002).
The competency is essentially a combination of knowledge, skills and attitudes. Knowledge is the
familiarity, awareness or comprehension acquired by study or experience. Skills are the ability to apply
knowledge whereas Attitude is a state of mind or feeling (Cleland, Ireland 2002). Determination of the
On Authors own account as project management practitioners with the leading global organizations
that PM competency should be represented by a hybrid of knowledge, skills and attributes, or KSA.
Knowledge means the expert knowledge comprises core knowledge such as in engineering or IT, plus
working knowledge in project management gained through life-long learning and education. Whereas
PM skill-sets include interpersonal skills, negotiation and communications skills, language abilities
and ICT skills etc that enable project mangers to perform effective jobs. PM attributes are the attitudes,
behavior, intuitiveness, sensitiveness, ethics, leadership (which is not a skill-set) and customer-centric.
To begin with, companies should profile PM competency based on the knowledge, skills and attributes
of each project manager to derive a gap analysis which helps defining project managers intervention
needs prior to PM performance measurement. Project managers must renew their knowledge and skills
regularly as having long service as project manager in a company can longer deem competent due to
the time relevance of knowledge and skills which can be replaced easily by todays fast changing
environment through globalization and the proliferation of internet technologies. On the other hand,
project managers should be benchmarked against a set of Key Performance Indicators (KPI) on PM
performance instead of the one-size-fits-all approach adopted by many organizations to measure
managerial performance regardless of their profession. Moreover, in order to nurture fair assessments
on PM competency and PM performance, companies should hire qualified external PM consultant to
formulate criteria which may include a 360 degree appraisal system, as well as involving PM
consultant in the assessment process. This is particularly crucial and inevitable for supervisors who are
not project management trained however conducting assessments on project managers. While
interventions such as trainings and certifications are inadequate nowadays to make project mangers
more competent therefore a career development plan will help to groom project managers to the level
of Vice President of projects.
PMCS embodies Project Process Management, PM Methodologies and the Project Knowledge
Management System supported by IT infrastructure to help expediting information sharing within
project management value chain.
The OPMCM encompasses three key areas within any organizations and they are the Cross-functional
Support System, Management Support System and Organizational Maturity Model.
With the downsizing of program management function due predominantly to global competition, the
cross-functional activities are filling the gaps that allow project managers to phase in early of the projects
to have a better grasp of project scope, project schedule and resources allocation for the purpose of
successful bidding and project planning. The cross-functional activities also cultivate a sharing culture of
organizational information and minimizing the potential conflicts among departmentalized functions. As
such project managers should be empowered to assess the performances on project support of these
functional departments. Ultimately, the most critical aspect in every project management initiative is the
management buy-in of project management as upper management and project sponsor can influence
every project outcome without even participating in projects. In the event of mounting technical and
commercial issues, the upper management should render assistance as moral boaster to project managers
when they need helps most. Based on the Project Management Maturity Model (OPM3) charted by PMI
in 1998, is designed to provide a way for organizations to understand organizational project management
and to measure their maturity against a comprehensive and broad-based set of organizational project
management best practices. OPM3 also helps organizations wishing their project management to plan for
improvement through three processes of knowledge, assessment and improvement (PMI/OPM3, 2003).
There are other school of thoughts synonymous to the OPM3 developed in recent years and one of the
most prominent examples is the Project Management Maturity Model (PMMM) which comprises five
levels of maturity represented by common language, common processes, singular methodology,
benchmarking and continuous improvement.(Kerzner, 2001). Another example is the Project
CONCLUSIONS
As more of the control algorithms are residing downstream at the primary element or final element
communicating via field bus infrastructures; the supervisory level of MES is heading upstream to
leverage on the advanced ICT technologies that will eventually rip off field buses and making
traditional controller box out of the control loop; is likely to be the next big things before the end of the
decade. If that happens, the CS business may well becoming part of the ICT business through a slew of
mergers and acquisitions and if CS vendors that are not up to speed on contemporary project
management may simply fall out from the global competition and disappearing completely from the
Automation and Control world. Drawing on the analogy that yesterday, it was the Instrumentation
Society of America (ISA); today, it is the Instrumentation, Systems and Automation (ISA); tomorrow
it might well be the world of Information, Communications Technology & Automation (ICTA).
According to ARC Advisory Group that the project services for the total process automation business
would escalate from USD14.2 B in 2002 to USD21.9B in 2007, or a 9.0 percent increase out of the
total business of USD46.2B in 2002 to USD58.2B in 2007. It these figures are anything to come by,
can the CS vendors counter the rapid rise in project service businesses in the next few years? Can they
handle the emerging technologies in wireless I/O communications and the future nanotechnologies that
will revolutionize the entire Automation and Control business? How shall project managers conduct
competency renewal to improve project performance? How shall companies strategize businesses
through project management maturity to tackle the increased complexity, diversity and adversity of
global environment?
To improve project outcome hence organizational performance; apart from raising the levels of project
manager capabilities companies should also take stock of their project management capability systems
and the organizational project management capability imperatively. Hopefully, this Enterprise Project
Management Capability Framework (EPMCF) can shed light and helping Control Systems vendors
drive changes out of the enterprise value chain and repositioning strategically in a whole new business
world.
2) Harold Kerzner (2001) Project Management, A System Approach to Planning, Scheduling, and
Controlling 2001 Seven Editions, John Wiley & Sons, Inc., pg 1045, pg1063
3) Himanshu Shah, Larry OBrien (2003) Total Automation Business For The Process Industries
Worldwide Outlook, Market Analysis And Forecast Through 2007, ARC Advisory Group, pg1-1,
pg4-3,pg4-10,pg4-42
4) K K Siew (2004) Managing Complexity, Diversity and Adversity on Projects in Todays Global
Environment under a Holistic Project Management Framework, The Proceeding of The Second
International Conference on Project Management of China (ICPM 2004) organized by The Chinese
Academy of Sciences, pg 64~pg74
5) Parviz F Rad/Ginger Levin (2002) The Advanced Project Management Office, A Comprehensive
Look at Function and Implementation, ST Lucie Press, pg 44
6) Paul C. Dinsmore (1999) Winning In Business With Enterprise Project Management 1999,
AMACOM, pg 19, pg172
7) Project Management Institute (2000) A Guide to the Project Management Body of Knowledge
(PMBOK Guide), pg 6,7,8
10) http://www.abb.com
http://www.cisco.com
http://www.emersonelectric.com
http://www.honeywell.com
http://www.hp.com
http://www.ibm.com
http://www.invensys.com
http://www.ipma.ch
http://www.microsoft.com
http://www.motorola.com
http://www.pmi.org
http://www.siemens.com