PART 1 | Project Categorization Methods | Multi-dimensional Classification of Projects 
Classifying Projects within Categories and Sub-Categories | Conclusions

In Part 1 of this paper, after reviewing the project environment and the need for a categorization system, I discussed Ad Hoc versus Systematic Project Categorization and presented a Proposed Matrix for Systematic Categorization of Projects. In this Part 2, I will elaborate further.

Project Categorization Methods

The method to be adopted for categorizing a group of projects typically depends on one or more specific attributes. Indeed, projects exhibit many attributes (for example those shown in Figure 2 in Part 1) or characteristics that might be used to define categories, and also to classify projects within a specific category.

The challenge here is to select the most appropriate characteristics to define the best categories for a specific purpose. A project categorization method is defined as the procedure to be applied in identifying the set of characteristics (or attributes) that will be used to:

• Place specific projects within specific categories, and
• Classify projects within a category (or sub-category).

Three examples of project categorization methods follow.

Market Share & Strategic Intent

A method for categorizing projects according to market share and strategic intent has been described briefly by Fern (2004 - see http://www.timetoprofit.com/TTPcategories.asp.) In his introduction, Fern says:

"To be useful, a project categorization system should achieve all of the following:

• It must provide an appropriate category for any project we may encounter,
• It must permit classifications within each category,
• It must provide useful insight about differences between projects in one category and projects in every other category, and
• Its categories must be readily translatable and comprehensible across human cultures.

"If projects are to be categorized according to the products they are intended to produce, a possible alternative categorization scheme might draw on work already done by others who focused on products."

"The products of projects are a set of deliverables intended to be of service to the customer of the project. While the deliverables may include one or more objects, such as an airplane or a highway, they are delivered for the purpose of providing a part of a service, transportation in this case. The objects are not the products. The products are the full set of services required to satisfy the customers stated or implied requirements."

Fern's categorization method combines the Boston Consulting Group's well-known matrix relating market share with market growth (Problem Child, Star, Cash Cow, and Dog) and Hammel and Prahalad's (1989) theory that products are developed to conform to the requirements of one of three strategic intents: technological excellence (TE), operational excellence (OE), or customer intimacy (CI). The Boston Consulting Group matrix is shown in Figure 4.

Figure 4: The Boston Matrix

Fern goes on to say:

"Products produced with a TE strategic intent incorporate features and functions that are not available in competing products. The high development costs of these breakthrough products are born by a small customer base that perceive some advantage in having what others do not. TE product development is technology driven and it tends to ignore customer input to the product development process. TE products must produce extremely high gross margins in order to recover not only their own development costs but also those of other failed TE development projects carried out by the performing organization."

"Products produced with an OE intent are often reverse engineered from TE products already available. These second entries may offer additional features and functions but will also offer more consistent quality and much lower prices. OE products take advantage of lower development costs, efficient manufacturing or production processes, and economies of scale to achieve lower costs and prices. Customer input is considered only to the extent that large groups of customers share similar requirements. Higher sales volumes offset lower gross margins."

"CI products are customized to the specific requirements of specific customers. Product designers endeavor to understand and incorporate the environment of these customers as critical conditions under which their product must function. A single customer, either through high price or high volume, must absorb CI development costs."

Project Matrix: Using the four Boston Matrix classes as rows and the three Strategic Intent classes as columns, we might choose to define projects in terms of their product characteristics. This yields a total of twelve theoretical project categories, as illustrated in Figure 5.

Figure 5: Possible project categories

"PC-TE products are produced for fast growing markets usually associated with emerging technologies and with little attention to customer requirements.
S-TE products focus on employing emerging technologies and processes to add features and functions in order to increase market share.
CC-TE products focus on employing emerging technologies and processes to reduce costs.
D-TE products use emerging technologies to assimilate the products, services, or business processes of merged or acquired competitors.
PC-OE products imitate existing products while integrating more reliable or cost-effective production processes" (Fern 2004.)

Project Product or End Result

Several authors have described categorization methods that focus primarily on the project product or end results (Youker 1999, Shenhar and Wideman 2002, Archibald 2004 among others.) From the perspective of developing project management, this form of categorization is probably the most significant, because the type of product determines the type of work involved and hence the best mode and methodology for managing the project. The basic premise is simple - For a project to be successful, different types of project work, associated with different types of product, need to be managed differently.

For example, Shenhar and Dvir proposed a matrix consisting of four project categories based on levels of Technological Uncertainty, set against three levels of Project Management Scope based on level of project management complexity. This arrangement was briefly summarized in a 1996 Shenhar and Wideman paper (Operations Research and Management Science (INFORMS), Washington, DC, May 1996) and is illustrated in Figure 6. This matrix is invaluable in alerting management to the relative risks of different levels of technology in the project and the degree of project management ceremony required.

Figure 6: Relation between Project/Program Scope and Technology Content

Shenhar and Wideman then examined the combination of the type of product and the type of work required to produce that product and concluded that this give rise to a basic matrix of four possible categories. This matrix is shown in Figure 7.

Figure 7: Basic project classification for purposes of management style

Development Project versus Deployment Projects

Pfeiffer (2004) describes an interesting approach to differentiating between 'development' and 'deployment' projects. Figure 8 shows his comparison of these two project types.

Figure 8. Basic differences of project types. Source: Pfeiffer 2004, p 5.

Pfeiffer describes "Demonstrative Projects", which he characterizes as development projects that "are the principle means of ProGau action for the transformation of municipal environmental management" (Pfeiffer 2004, p 4.) ProGau is the Urban Environmental Management Project, which is a part of a Brazil-German Technical Cooperation effort that has been going on for 40 years. See www.gau.org.br or www.gtz.de for more detail.

PART 1

Multi-dimensional Classification of Projects

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