Historical Basis

During favorable economic times, changes in management style and corporate culture occur very slowly. Executives are reluctant to "rock the boat." But favorable economic conditions don't last forever. The period between recognizing the need for change and garnering the ability to manage change is usually measured in years. As economic conditions deteriorate, change occurs more and more quickly in business organizations, but still not fast enough to keep up with the economy. To make matters worse, windows of opportunity are missed because no project management methodology is in place.

TABLE 2-1. EFFECTS OF THE 1989-1993 RECESSON ON THE IMPLEMENTATION OF PROJECT MANAGEMENT

Factor

Prior to the Recession

After the Recession

Strategic focus

Short-term

Long-term

Organizational structuring

To secure power, authority,

To get closer to customers

and control

Management focus

To manage people

To manage work and

deliverables

Sponsorship

Lip service sponsorship

Active

Training emphasis

Quantitative

Qualitative/behavioral

Risk analysis

Minimal effort

Concerted effort

Authority

In writing

Implied

Team building

Functional teams

Cross-functional teams

Before the recession of 1989-1993, U.S. companies were willing to accept the implementation of project management at a tedious pace. The implementation, if it happened at all, simply consisted of using or adopting new planning and scheduling tools for the benefit of the employee, not the company. Corporate managers in general believed that their guidance was sufficient to keep their companies healthy, and outside consultants were brought in primarily to train production workers in the principles of project management. Executive training sessions, even very short ones, were rarely offered.

During the recession, senior managers came to realize that their knowledge of project management was not as comprehensive as they had once believed. Table 2-1 shows how the recession affected the development of project management systems.

By the end of the recession, in 1993, many companies had finally recognized the importance of both strategic planning and project management, as well as the relationship between them. The relationship between project management and strategic planning can best be seen from Figure 2-1. Historically, a great deal of emphasis had been placed on strategic formulation with little emphasis on strategic implementation. Now companies were recognizing that the principles of project management could be used for the implementation of strategic plans, as well as operational plans. Now, project management had the attention of senior management.

Another factor promoting project management was the acceptances of strategic business units (SBUs). There was usually less resistance to the use of project management in the SBU than in the parent company, along with greater recognition for the need to obtain horizontal as well as vertical work flow. This is shown in Figure 2-2. Project management was now recognized as a vehicle for the implementation of just about any type of plan for any type of project. Organizational charts showed project teams working horizontally across the corporation rather than vertically.

To address the far-reaching changes in the economic environment, senior managers began to ask a fundamental question: How do we plan for excellence in

External Analysis

Environmental Opportunities and Threats

Firm's Social Responsibility

Strategy Evaluation

Strategy Selection

Strategy Implementation

Internal Analysis

Organizational Strengths and Weaknesses

Environmental Opportunities and Threats

Organizational Strengths and Weaknesses

Firm's Social Responsibility

Strategy Evaluation

FIGURE 2-1. Basic strategic planning.

Budgets

FIGURE 2-2. Hierarchy of strategic plans. Source: Unknown.

Strategic Plans

Supporting Plans & Budgets

Budgets

Budgets

FIGURE 2-2. Hierarchy of strategic plans. Source: Unknown.

TABLE 2-2. STRATEGIC FACTORS IN ACHIEVING EXCELLENCE

Factor

Short-Term Applications

Long-Term Implications

Qualitative

Provide educational training

Emphasize cross-functional

Dispel illusion of a need for

working relationships and

authority

team building

Share accountability

Commit to estimates and

deliverables

Provide visible executive support

and sponsorship

Organizational

De-emphasize policies and

Create project management

procedures

career path

Emphasize guidelines

Provide project managers with reward/penalty power

Use project charters

Use nondedicated, cross-functional teams

Quantitative

Use a single tool for planning, scheduling, and controlling

Use estimating databases

project management? In answering this question, it would be futile to expect managers to implement immediately all of the changes needed to set up modern project management in their companies. What senior managers needed was a plan expressed in terms of three broad, critical success factors: qualitative factors, organizational factors, and quantitative factors. To take advantage of the economic outlook, whatever it happened to be at a given time, senior managers needed a plan like the one shown in Table 2-2.

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