Project management capability or capacity – which one has your attention?

Capability and capacity issues were among the principal drivers for the surge of outsourcing seen in the ’90s. Appealing, but (as it turned out) not compelling, arguments were made about the ability of large groups of specialists to form self-enhancing communities of practice to drive up capability. Meanwhile, the statistics of large numbers would take care of the peaks and troughs of demand – thus satisfying the capacity problem.

A related concern is that the ‘leaching’ of intellectual property (IP; that increasingly highly valued commodity – which must include the knowledge held by internal resource) has proved very hard to limit, with the associated reduction in distinction between, and specific value proposition of, competitor companies.

A further linked trend was the introduction of ‘contractorisation’; reducing permanent headcount and replacing with, usually long-term, contractors. The implied flexibility, the matching of capacity with demand, and indeed the selection of the appropriate skills without the costs of training has proved largely illusory. While attractive in terms of matching numbers to demand, it has turned out not to resolve the challenges of capability or capacity.

Once again the loss of IP – or rather the failure to retain IP – has become a very serious issue. The problem is so serious that some organisations have begun a concerted effort to ‘decontractorise’, which means exactly what it says – with long term contractors being faced with stark choices of ‘join (and accept the salary reduction) or leave’! But there are other issues, not least of which are the difficulty in the performance management of contractors and the level of personal development investment made by contractors is often lower than that carried out by organisations.

So what does work? What are successful organisations doing?

They are addressing the capability problem by staged and structured investment in their staff, especially those identified as ‘key’, because they are, or will be, owners of essential IP. ‘Will’, because rather than hiring only experienced, trained, (and so skilled) individuals, successful organisations are placing 30% of investment in developing people. Their capacity problem, however, is being dealt with in rather more interesting ways. Firstly by hiring – usually through managed-service providers – and secondly by managing the demand.

This second approach is particularly apparent in well-run project-based organisations. The financial pressure over the past few years has challenged the way investment is made in projects with the result that enterprise-wide project portfolio management has become a valued activity. By applying the principles derived from financial portfolio management and concepts of value in a more rigorous way, the demand for projects is being addressed, and with it, capacity.

The questions their Boards are addressing today are not just about the desirability, but also the do-ability of change, and that is defined in terms of capacity and capability, no longer just in terms of pounds and pence.

The most effective solution is as it always was – a blend.

Contractor skills and expertise and internal development can usefully be brought together. For larger organisations this blend is formed through the development of professions or academies or by simply establishing communities of professionals who share a common goal.

But in each it is clear that the most successful form of capability development isn’t about providing training courses. It has been proven that a blend of knowledge transfer (often via courses and e-learning) for the less experienced, followed by ‘application-based’ learning to enhance and broaden expertise and experience, is the most effective approach.

So what are the critical steps towards a successful solution?

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