Entrance via project Entrance via driven divisions such marketing as MIS and RDengineering and RD

Figure 2-8. From hybrid to project-driven.

has come to the realization that they can most effectively run their organization on a "management by project" basis, and thereby achieve the benefits of both a project management organization and a traditional organization. The rapid growth and acceptance of project management during the last ten years has taken place in the non-project-driven/hybrid sectors. Now, project management is being promoted by marketing, engineering, and production, rather than only by the project-driven departments (see Figure 2-8).

A second factor contributing to the acceptance of project management was the economy, specifically the recessions of 1979-1983 and 1989-1993. This can be seen from Table 2-3. By the end of the recession of 1979-1983, companies recognized the benefits of using project management but were reluctant to see it implemented. Companies returned to the "status quo" of traditional management.

TABLE 2-3. RECESSIONARY EFFECTS

Characteristics

Solutions

Recession Layoffs R&D Training Sought Results of the Recessions

1979-1983 Blue collar Eliminated Eliminated Short-term •Return to status quo

• No project management support

• No allies for project management

1989-1993 White collar Focused Focused Long-term • Change way of doing business

Risk management

• Examine lessons learned

There were no allies or alternative management techniques that were promoting the use of project management.

The recession of 1989-1993 finally saw the growth of project management in the non-project-driven sector. This recession was characterized by layoffs in the white collar/management ranks. Allies for project management were appearing and emphasis was being placed upon long-term solutions to problems. Project management was now here to stay.

The allies for project management began surfacing in 1985 and continued throughout the recession of 1989-1993. This is seen in Figure 2-9.

• 1985: Companies recognize that they must compete on the basis of quality as well as cost. There exists a new appreciation for total quality management (TQM). Companies begin using the principles of project management for the implementation of TQM. The first ally for project management surfaces with the "marriage" of project management and TQM.

• 1990: During the recession of 1989-1993, companies recognize the importance of schedule compression and being the first to market. Advocates of concurrent engineering begin promoting the use of project management to obtain better scheduling techniques. Another ally for project management is born.

• 1991-1992: Executives realize that project management works best if decision-making and authority are decentralized. Executives recognize that control can still be achieved at the top by functioning as project sponsors.

• 1993: As the recession of 1989-1993 comes to an end, companies begin "re-engineering" the organization, which really amounts to elimination of organizational "fat." The organization is now a "lean and mean" machine. People are asked to do more work in less time and with fewer people; executives recognize that being able to do this is a benefit of project management.

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Figure 2-9.

New processes supporting project management.

• 1994: Companies recognize that a good project cost control system (i.e., horizontal accounting) allows for improved estimating and a firmer grasp of the real cost of doing work and developing products.

• 1995: Companies recognize that very few projects are completed within the framework of the original objectives without scope changes. Methodologies are created for effective change management.

• 1996: Companies recognize that risk management involves more than padding an estimate or a schedule. Risk management plans are now included in the project plans.

• 1997-1998: The recognition of project management as a professional career path mandates the consolidation of project management knowledge and a centrally located project management group. Benchmarking for best practices forces the creation of centers for excellence in project management.

• 1999: Companies that recognize the importance of concurrent engineering and rapid product development find that it is best to have dedicated resources for the duration of the project. The cost of overmanagement may be negligible compared to risks of undermanagement. More and more organizations can be expected to use colocated teams all housed together.

• 2000: Mergers and acquisitions are creating more multinational companies. Multinational project management will become the major challenge for the next decade.

As project management continues to grow and mature, more allies will appear. In the twenty-first century, second and third world nations will come to recognize the benefits and importance of project management. Worldwide standards for project management will occur.

The reason for the early resistance to project management was that the necessity for project management was customer-driven rather than internally driven, despite the existence of allies. Project management was being implemented, at least partially, simply to placate customer demands. By 1995, however, project management had become internally driven and a necessity for survival. Project management benchmarking was commonplace, and companies recognized the importance of achieving excellence in project management.

If a company wishes to achieve excellence in project management, then that company must go through a successful implementation process. The speed by which implementation occurs will dictate how quickly the full benefits of project management will be realized. This can be illustrated with Situation 2-1.

Situation 2—1: The aerospace division of a Fortune 500 company had been using project management for over thirty years. Everyone in the organization had attended courses in the principles of project management. From 1985 to 1994, the division went through a yearly ritual of benchmarking themselves against other aerospace and defense organizations. At the end of the benchmarking period, the staff would hug and kiss one another, believing that they were performing project management as well as could be expected.

In 1995, the picture changed. The company decided to benchmark itself against organizations that were not in the aerospace or defense sector. The company soon learned that there were companies that had been using project management for less than five or six years but whose skills at implementation had surpassed the aerospace/defense firms who had been using project management for more than thirty years. It was a rude awakening to see how quickly several non-profit-driven firms had advanced in project management.

Another factor that contributed to a resistance to change was senior management's preference for the status quo. More often than not, this preference was based upon what was in the executives' best interest rather than the best interest of the organization as a whole. This led to frustration for those in the lower and middle levels of management, who supported the implementation of project management for the betterment of the firm.

It was also not uncommon for someone to attend basic project management programs and then discover that his or her organization would not allow full implementation of project management. To illustrate this problem, consider Situation 2-2 below:

Situation 2-2: The largest division of a Fortune 500 company recognized the need for project management. Over a three -year period, 200 people were trained in the basics of project management, and 18 people passed the national certification exam for project management. The company created a project management division and developed a methodology for project management. As project management began to evolve in this division, the project managers quickly realized that the organization would not allow their "illusions of grandeur" to materialize. The executive vice president made it clear that the functional areas, rather than the project management division, would have budgetary control. Project managers would not be empowered with authority or critical decision-making opportunities. Simply stated, the project managers were being treated as expediters and coordinators, rather than real project managers. There were roadblocks that had to be overcome before theory could be turned into practice. How to overcome these obstacles had not been discussed in the basic courses on project management.

Even though project management has been in existence for more than forty years, there are still different views and misconceptions about what project management really is. Textbooks on operations research or management science still have chapters that are entitled, "Project Management" but that discuss only PERT scheduling techniques. A textbook on organizational design recognized project management as simply another organizational form. Even among educators, differing views are still prevalent.

All companies sooner or later understand the basics of project management. But those companies that have achieved excellence in project management have done so through successful implementation and execution of processes and methodologies.

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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