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• Competitiveness

• Executive understanding

• New project development

• Efficiency and effectiveness

Manufacturing companies are driven to project management because of large capital projects or a multitude of simultaneous projects. Executives soon realize the impact on cash flow and that slippages in the schedule could end up idling workers.

Companies that sell products or services, including installation, to their clients must have good project management practices. These companies are usually non-project-driven but function as though they were project-driven. These companies now sell solutions to their customers rather than products. It is almost impossible to sell complete solutions to customers without having superior project management practices because what you are actually selling is your project management expertise.

There are two situations where competitiveness becomes the driving force: internal projects and external (outside customer) projects. Internally, companies get into trouble when the organization realizes that much of the work can be outsourced for less than it would cost to perform the work themselves. Externally, companies get into trouble when they are no longer competitive on price or quality, or simply cannot increase their market share.

Executive understanding is the driving force in those organizations that have a rigid traditional structure that performs routine, repetitive activities. These organizations are quite resistant to change unless driven by the executives. This driving force can exist in conjunction with any of the other driving forces.

New product development is the driving force for those organizations that are heavily invested in R&D activities. Given that only a small percentage of R&D projects ever make it into commercialization where the R&D costs can be recovered, project management becomes a necessity. Project management can also be used as an early warning system that a project should be cancelled.

Efficiency and effectiveness, as driving forces, can exist in conjunction with any other driving forces. Efficiency and effectiveness take on paramount importance for small companies experiencing growing pains. Project management can be used to help such companies remain competitive during periods of growth and to assist in determining capacity constraints.

Because of the interrelatedness of these driving forces, some people contend that the only true driving force is survival. This is illustrated in Figure 2-4. When the company recognizes that survival of the firm is at stake, the implementation of project management becomes easier.

The speed by which companies reach some degree of maturity in project management is most often based upon how important they perceive the driving forces to be. This is illustrated generically in Figure 2-5. Non-project-driven and hybrid organizations move quickly to maturity if increased internal efficiencies and effectiveness are needed. Competitiveness is the slowest path because these types of organizations do not recognize that project management affects their competitive position directly. For project-driven organizations, the path is reversed. Competitiveness is the name of the game and the vehicle used is project management.

Efficiency and Effectiveness

FIGURE 2-4. The components of survival. Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management. New York: Wiley, 1998, p. 51.

Capital Projects

New Product Development

Customers' Expectations

Executive Understanding

Competitiveness

FIGURE 2-4. The components of survival. Source: Reprinted from H. Kerzner, In Search of Excellence in Project Management. New York: Wiley, 1998, p. 51.

Once the organization perceives the need for project management, it enters the second life-cycle phase of Table 2-1, Executive Acceptance. Project management cannot be implemented rapidly in the near term without executive support. Furthermore, the support must be visible to all.

The third life-cycle phase is Line Management Acceptance. It is highly unlikely that any line manager would actively support the implementation of project management without first recognizing the same support coming from above. Even minimal line management support will still cause project management to struggle.

Internal Efficiencies & Effectiveness

Project-Driven

Organizations

Non-Project-Driven and Hybrid Organizations

Project-Driven

Organizations

Competitiveness z

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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