Abstract
The importance of fit between an organization’s implementation of project management (PM), and its business level strategy is emphasized in the literature. However, there are a limited number of studies investigating the relationship between business level strategy and implementation of PM in the construction industry. This paper aligns one of the business strategies, namely differentiation, with the PM process. A framework representing differentiation in the construction industry is proposed in this study. Structural equation modelling (SEM) is used to validate the relationship between differentiation and the PM process. The results show that a relationship between differentiation strategy and PM exists. The two types of differentiation are revealed, namely “product variety and speed-related differentiation” (PSD) and “quality and image-related differentiation” (QID). The companies trying to differentiate based on PSD should focus on cost, time and quality management. Change management and project planning are identified as important drivers of differentiation based on PSD. On the other hand, the companies trying to differentiate on QID should consider health, safety and environmental issues as well as quality. Companies should also manage their resources effectively to support the PM process that in turn leads to successful differentiation. Companies can utilize the research findings as a guideline while formulating their differentiation strategies.
Highlights
The importance of strategic management for construction companies has long been stressed by many researchers (Chinowsky, Meredith 2000; Tan et al 2012; Warszawski 1996)
The companies can determine which activities in the project management (PM) process should be concentrated on in order to differentiate themselves; in addition they identify whether the differentiation strategy is a valid strategy by evaluating their PM process
The findings of this study show that there is a relationship between a business level strategy and PM process, in other words the construction companies can achieve business level strategies by carrying out PM activities
Summary
The importance of strategic management for construction companies has long been stressed by many researchers (Chinowsky, Meredith 2000; Tan et al 2012; Warszawski 1996). These studies focus on the application of strategic management at the business level, whereas, there exist studies stating that the strategic priorities at the functional level should be considered to implement the business level strategies properly (Joshi et al 2003; Srivannaboon, Milosevic 2006). Whereas companies working in project based industries can meet strategic and operational challenges through working on projects smartly (Longman, Mullins 2004)
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