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Why Better Project Management Matters Print
The last 50 years have seen an explosion in the practice of project management.
Professional association membership has grown significantly worldwide. 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.

The Value Proposition of Project Management

In many organizations today, one finds project management being used in information systems development, new product development, software integration, and 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. Therein lies the rub. Clearly there is a gap between perception and reality. The good news is that there is hard research that demonstrates the value of project management. The remaining challenge is to convince organizations to look at project management in a different light.

Project management faces a perception problem. Part of it is self-inflicted by the professional associations whose members are the true believers. The focus of these associations is the promotion of project management as if it were in a vacuum. This is possibly the biggest mistake these organizations make. Ultimately there is nothing wrong with defining and promoting the attributes, methods, and practices of project management. To submit that project management is a profession and is the goal and objective in and of itself misses the point entirely. To understand this, one need only look at the cottage industries that have grown around the professional associations.

These include certification training, project management consultants, professional development focused on the project management practice, and educational institution assimilation of the project management discipline as witnessed by the growth of degree programs in project management. What 90% of these lack is any recognition that project management is a tool to be used for the benefit of deriving business and organizational value. Plain and simple, project management is an operational practice; the means to an end. Practiced well, it leads to value; practiced poorly it does virtually nothing except give itself a bad name.

The Human Factor

This raises the issue of the human factor. 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 an organization. Were this not true, every organization that practices project management would realize similar benefits. We know this is not the case. 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. Other clerks are responsible for approving the LC as assurance that appropriate controls are in place to prevent fraud, 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 an acceptable outcome to a bank and they manage the process accordingly. Both examples above focus on organizational discipline: the first in a one-time project environment and the second in an on-going operations environment.

Compare those two situations with the hypothetically haphazard deployment of project management within these same organizations. Experience shows that different methods and practices are probably conducted within different internal divisions and departments. Individual project managers most likely do things differently exhibiting 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 tremendous amount of behavioral research linking project failures with project complexity and staffing practices among other things.

Problematically, many organizations appear to be complacent about the situation figuring that they implemented a project management office and a project management methodology, now all that they have to do is 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.

Project Management as Operational Competency

Success in supporting project management as an operational function requires two things:

  1. an understanding that project management is a tool, and
  2. implementing organization-wide discipline related to the management and practice of the tool. The tool exists for the benefit of providing value to the organization. Used correctly, the tool can provide improved product time-to-market resulting in quicker revenue realization, 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 above. This is nothing more than good management. If it were done more effectively than it is now, organizations would not look to cut project managers first when financial times get tough and they need to cut costs as happened during the economic downturn of 2001-2003. This was a disturbing and too common practice that senior managers at numerous organizations exhibited during this period because project management is not viewed as operationally important, but as an expendable ‘nice-to-have’.

The key to turning project management into a core operational competency involves benchmarking. As mentioned in the opening paragraph, there is existing hard research that 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 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 improved performance focused on business results. The data has become so robust over the years that it is now possible to draw projections for PM ROISM based on an organization’s current assessed level and a realistic projected target level to be achieved by addressing the identified areas for improvement.

The Benefits of Benchmarking

Even more compelling is that several organizations have been re-assessed a couple of years after implementing the recommendations for improvement highlighted by the data from the original assessment. In one case, improvements included faster time-to-market, project manager staffing ratios that reduced the cost of delivering business value by over 40% annually, and greater project portfolio predictability leading to higher project throughput which means more business value delivered.

The concept behind rigorous benchmarking is that the assessment collects data and reports results; the data represents information regarding which project management methods and practices could be improved; addressing the areas for improvement leads to PM maturity; PM maturity leads to integrated and sustained performance which drives business financial benefit. Ultimately, the results referenced above were driven by discipline; discipline in analyzing where the significant deficiencies were; discipline in applying methods and practices to address or eliminate those deficiencies, discipline in measuring performance; and discipline in eliminating the human factor to the extent possible through training, best practices, and organizational commitment and support to improving the operational process known as project management.

Why Good Project Management Matters

This then is the proof as to why getting better at project management matters. The short answer is simple and sweet; operational competencies lead to bottom line financial results and project management is one such competency. Given today’s business mantra of “Do more with less,” one sees the many opportunities available to organizations to make this happen. The data is there; the path to improvement is there; the results are there. Project management should be viewed as an operational competency; nothing more, nothing less. That said, with the appropriate level of discipline in its implementation, it is a powerful tool capable of great potential. Better project management matters.

2004 © Absolute Consulting Group, Inc. All rights reserved.

 

About the author
Douglas Arnstein, PMP, is the President of Absolute Consulting Group, a Management consulting firm. He has over 25 years of professional experience encompassing process improvement initiatives, organizational management, project management, project risk management, systems design and development, and professional development seminars design and development. Mr. Arnstein has a B.S. in Human Relations and Organizational Behavior from the University of San Francisco. He is a member of Project Management Institute, the Commonwealth Club of California, and holds a Passport membership with the National Speakers Association Northern California Chapter. Mr. Arnstein has spoken at PMI national and local chapter Symposia from 2000-2004, the Association of Information Technology Professionals Region 5 conference in 2002, and the Banker’s Association of Foreign Trade conference in 1997.
Douglas Arnstein is a consultant, speaker, and trainer whose compelling motivation is helping organizations develop their project management capabilities and improve their performance. Mr. Arnstein also works with the Ibbs Consulting Group Inc. related to project management assessments.
Mr. Arnstein can be reached at 415-291-9252 (USA) or at Email

Douglas Arnstein, PMP
Absolute Consulting Group, Inc.
Email
Phone / fax: 415-291-9252
Cell: 415-845-3708
http://www.absolute-consulting.com/

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