The last 50 years have seen an explosion in the practice of project management. Methods and practices have spread far beyond the industries and organizations that are commonly associated with its origins: engineering and construction, aerospace, automotive, and military applications. In many organizations today, one finds project management being used in high-tech manufacturing, information systems development, product development, software integration and network/infrastructure upgrades among numerous other areas.
Much has been said and written about the promise of project management, yet hard research has lagged behind the survey-oriented results that highlight the perception that project management benefits organizations. Although this message is generally believed to have made it to the ranks of senior management, one would be hard pressed to find a C-level executive who has seen the value of project management demonstrated. Clearly there is a gap between perception and reality. The good news is that there is research that demonstrates the value of project management. The remaining challenge is to convince organizations to look at project management in a different light.
The perception problem that project management faces is partly self-inflicted by the professional associations whose members are the true believers. These associations tend to promote project management as if it were in a vacuum.
To understand this, look at the cottage industries that have grown around the professional associations. These include certification training, professional development and educational institution assimilation of the project management discipline as witnessed by the growth of degree programs in project management.
Doing it well and doing it poorly
What many of these lack is any recognition that project management is a tool to be used for the benefit of deriving business and organizational value. Simply put, project management is an operational practice; the means to an end. Practiced well it leads to value; practiced poorly it can cost organizations large sums of money while simultaneously giving itself a bad name. Project management is nothing more than a construct with methods and practices that support it. The difference between doing it well and doing it poorly therefore must lie with the practitioners, those who manage the practitioners and the organizational support provided to project management within organizations.
If we look at the differences between how a manufacturing company implements engineering-driven machinery development, how a bank implements financial market-driven operational processes and how most organizations implement human-driven project management, some interesting dynamics surface. The discipline required to develop a machine to produce a specific part for a manufacturing process has no tolerance for error. It is design and specification driven, requiring a precision in planning, design, development, quality assurance and quality control that ultimately drives the organization’s ability to achieve its business goals and stay in business.
Likewise in a bank’s trade finance operations department, an import letter of credit (LC) clerk is trained to collect the right data from the applicant and determine the applicant’s credit worthiness prior to booking the letter of credit. As assurance that appropriate controls are in place to prevent fraud, other clerks are responsible for approving the LC, and yet other clerks are responsible for checking shipping discrepancies once the LC has been presented for payment.
These workers are constantly measured and evaluated on their accuracy and number of errors made because in this operational environment errors equal losses of money and/or customer good will. Neither are acceptable to a bank, which manages the process accordingly.
Both examples above focus on organizational discipline: the first in a one-time project environment and the second in an ongoing operations environment.
PM as an operational competency
Compare those two situations with the often haphazard deployment of project management within organizations. Experience shows that different methods and practices are probably conducted within internal divisions and departments. Individual project managers exhibit varying degrees of expertise and skill that are not necessarily aligned with the project to which they have been assigned. Staffing is often based on “New project? Who is available?” or worse yet, “Who has the bandwidth to take this on?” This is in spite of the research linking project failures to project complexity and project leader staffing practices, among other things.
Many organizations appear to be complacent about the situation, figuring that once they implemented a project management office and a project management methodology, all they had to do was sit back and watch the benefits flow in. Wrong. What is missing is that more focus needs to be put on project management as an operational competency.
Success in supporting project management as an operational function requires two things: an understanding that project management is a tool, and implementation of organizationwide discipline related to the management and practice of the tool.
The tool exists for the benefit of providing value to the organization. Used correctly, it can provide improved product time-to-market, better project cost and schedule performance leading to greater portfolio predictability and reliability, and more project value delivered for equal or lower cost. What it takes to do so is for organizations to implement the same discipline and precision in planning, executing, quality control, measurement and evaluation that they do as a matter of course in other areas, as noted earlier.
This is nothing more than good management. One key to turning project management into a core operational competency involves institutionalizing it. This includes defining and developing a set of best practices, and creating a job family and career path for project managers.
The best practices should be based on a project management capability maturity model. This is usually a five-step model patterned after the Software Engineering Institute’s Capability Maturity Model (CMM) created for software development. The concept of the model is that there is a series of steps and best practices from ad hoc to repeatable to defined-and-managed processes that lead to sustained, optimized performance. As an organization climbs the steps, it becomes more mature and disciplined.
Research into the benefits of PM
Existing hard research identifies the benefits of project management. Conducted by Dr. William Ibbs and Justin Reginato of the University of California at Berkeley and Dr. Young Hoon Kwak of George Washington University, the research indicates a correlation between project management maturity and organizational financial results. Based on the collection of various project management costs, a project management capability maturity assessment, and project portfolio metrics for cost and schedule performance, the benchmarking is able to target specific practices within the project phases and knowledge areas that would lead an organization to higher maturity and better performance focused on business results.
Several organizations were re-assessed a couple of years after implementing the recommendations for improvement highlighted by the data from the original research. One company realized a five percent improvement in project (product) time-to-market, a 40 percent reduction in project delivery costs annually, and greater project portfolio predictability leading to higher project throughput (i.e., more business value delivered).
Ultimately, the results were driven by discipline in analyzing where the significant deficiencies were; in applying methods and practices to address or eliminate those deficiencies; and in measuring performance and discipline in improving process behaviors through training, best practices and organizational commitment and support.
Given today’s business mantra of “Do more with less”, one can see the many opportunities available to organizations to make this happen. Project management should be viewed as an operational competency. With the appropriate level of discipline in its implementation, it is a powerful tool capable of great potential. The promise of that tool is better business financial results. Better project management matters.
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–Douglas Arnstein, PMP, is president of Absolute Consulting Group, which helps organizations develop their project management capabilities and improve performance. He can be reached at 415-291-9252 or at [email protected].
