Effective Project Management in the Small Business Organization

The acceptance of project management in large companies has been relatively easy because of the abundance of published literature identifying its potential pitfalls and problems. The definition of a small project could be:

• Total duration is usually three to twelve months.

• Total dollar value is $5,000 to $1.5 million (upper limit is usually capital equipment projects).

• There is continuous communication between team members, and no more than three or four cost centers are involved.

• Manual rather than computerized cost control may be acceptable.

Project managers work closely with functional personnel and managers on a daily basis, so time-consuming detail reporting is not necessary.

• The work breakdown structure does not go beyond level three.

Here, we are discussing project management in both small companies and small organizations within a larger corporation. In small organizations, major differences from large companies must be accounted for:

• In small companies, the project manager has to wear multiple hats and may have to act as a project manager and line manager at the same time. Large companies may have the luxury of a single full-time project manager for the duration of a project. Smaller companies may not be able to afford a full-time project manager and therefore may require that functional managers wear two hats. This poses a problem in that the functional managers may be more dedicated to their own functional unit than to the project, and the project may suffer. There is also the risk that when the line manager also acts as project manager, the line manager may keep the best resources for his own project. The line manager's project may be a success at the expense of all the other projects that he must supply resources for.

In the ideal situation, the project manager works horizontally and has project dedication, whereas the line manager works vertically and has functional (or company) dedication. If the working relationship between the project and functional managers is a good one, then decisions will be made in a manner that is in the best interest of both the project and the company. Unfortunately, this may be difficult to accomplish in small companies when an individual wears multiple hats.

•In a small company, the project manager handles multiple projects, perhaps each with a different priority. In large companies, project managers normally handle only one project at a time. Handling multiple projects becomes a serious problem if the priorities are not close together. For this reason, many small companies avoid the establishment of priorities for fear that the lower-priority activities will never be accomplished.

•In a small company, the project manager has limited resources. In a large company, if the project manager is unhappy with resources that are provided, he may have the luxury of returning to the functional manager to either demand or negotiate for other resources. In a small organization, the resources assigned may be simply the only resources available.

•In a small company, project managers must generally have a better understanding of interpersonal skills than in a larger company. This is a necessity because a project manager in the small company has limited resources and must provide the best motivation that he can.

• In the smaller company, the project manager generally has shorter lines of communications. In small organizations project managers almost always report to a top-level executive, whereas in larger organizations the project managers can report to any level of management. Small companies tend to have fewer levels of management.

• Small companies do not have a project office. Large companies, especially in aerospace or construction, can easily support a project office of twenty to thirty people, whereas in the smaller company the project manager may have to be the entire project office. This implies that the project manager in a small company may be required to have more general and specific information about all company activities, policies, and procedures than his counterparts in the larger companies.

•In a small company, there may be a much greater risk to the total company with the failure of as little as one project. Large companies may be able to afford the loss of a multimillion-dollar program, whereas the smaller company may be in serious financial trouble. For example, a machine tool company in the Midwest has almost 70 percent of its business generated by one of the big three automotive manufacturers. The risk to the small company occurs when one project represents a large percentage of its business. Thus many smaller companies avoid bidding on projects that could place the company in such a delicate position; for, with the acceptance of such a project, the company would have to hire additional resources or give up some of its smaller accounts.

•In a small company, there might be tighter monetary controls but with less sophisticated control techniques. Because the smaller company incurs greater risk with the failure (or cost overrun) of as little as one project, costs are generally controlled much more tightly and more frequently than in larger companies. However, smaller companies generally rely on manual or partially computerized systems, whereas larger organizations rely heavily on sophisticated software packages. Today, more and more small companies are being forced to completely computerize their cost control procedures to adhere to requirements imposed by customers and prime contractors.

•In a small company, there usually exists more upper-level management interference. This is expected because in the small company there is a much greater risk with the failure of a single project. In addition, executives in smaller companies "meddle" more than executives in larger companies, and quite often delegate as little as possible to project managers.

• Evaluation procedures for individuals are usually easier in a smaller company. This holds true because the project manager gets to know the people better, and, as stated above, there exists a greater need for interpersonal skills on the horizontal line in a smaller company.

•In a smaller company, project estimating is usually more precise and based on either history or standards. This type of planning process is usually manual as opposed to computerized. In addition, functional managers in a small company usually feel obligated to live up to their commitments, whereas in larger companies, much more lip service is given.

The arguments presented here are not necessarily meant to discourage the small company, but to identify problems that may be encountered and must be resolved. Project management, when implemented correctly, will generate a smoother flow of work and better control of resources, on both horizontal and vertical lines.

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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