FIGURE 3-1. Methodology structuring.

• Work breakdown structure (WBS)

The functional or management baseline indicates how you will manage the technical baseline. This includes:

• Project policies and procedures

• The organization for the project

• Responsibility assignment matrices (RAMs)

The financial baseline identifies how costs will be collected and analyzed, how variances will be explained, and how reports will be prepared. Altogether, this is a simple process that can be applied to each and every project.

Without this repetitive process, subunits tend to drift off in their own direction without regard to their role as a subsystem in a larger system of goals and objectives. The objective-setting and the integration of the implementation process using the methodology assure that all of the parts of an organization are moving toward the same common objective. The methodology gives direction to diverse activities, as well as providing a common process for managing multinational projects.

Another advantage of strategic project planning is that it provides a vehicle for the communication of overall goals to all levels of management in the organization. It affords the potential of a vertical feedback loop from top to bottom, bottom to top, and functional unit to functional unit. The process of communication and its resultant understanding helps reduce resistance to change. It is ex tremely difficult to achieve commitment to change when employees do not understand its purpose. The strategic project planning process gives all levels an opportunity to participate, thus reducing the fear of the unknown and possibly eliminating resistance.

The final and perhaps the most important advantage is the thinking process required. Planning is a rational, logically ordered function. This is what a structured methodology provides. Many managers caught up in the day-to-day action of operations will appreciate the order afforded by a logical thinking process. Methodologies can be based upon sound, logical decisions. Figure 3-2 shows the logical decision-making process that could be part of the project selection process for an organization. Checklists can be developed for each section of Figure 3-2 to simplify the process.

The first box in Figure 3-2 is the project definition process. At this point, the project definition process simply involves a clear understanding of the objectives, which should be defined in both business and technical terms.

The second box is an analysis of the environmental situation. This includes a market feasibility analysis to determine:

• The potential size of the market for the product

• The potential risks on product liability

• The capital requirements for the product

• The market position on price

• The expected competitive response

• The regulatory climate, if applicable

• The degree of social acceptance

Project Definition

Environmental Situation

Competitive Situation

Resources & Capabilities

Analysis of Past Performance

FIGURE 3-2. Project selection process.

The third box in Figure 3-2 is an analysis of the competitive situation and includes:

• The overall competitive advantage of the product

• Opportunities for technical superiority:

• Product performance

• Patent protection

• Exceptional price-quality-value relationship

• Business attractiveness:

• Type and nature of competitors

• Structure of the competition/industry

• Differences among competitors (price, quality, etc.)

• Threat of substitute products

• Competitive positioning:

• Rate of change in market share

• Perceived differentiation among competitors and across various market segments

• Positioning of the product within the product line

• Opportunities for market positioning:

• Franchises

• Reputation/image

• Superior service

• Supply chain management:

• Ownership of raw material sources

• Vertical integration

• Physical plant opportunities:

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