By the 1990s, companies had begun to realize that implementing project management was a necessity, not a choice. The question was not how to implement project management, but how fast could it be done? Table 2–1 shows the typical life-cycle phases that an organization goes through to implement project management. In the first phase, the Embryonic Phase, the organization recognizes the apparent need for project management. This recognition normally takes place at the lower and middle levels of management where the project activities actually take place. The executives are then informed of the need and assess the situation. There are six driving forces that lead executives to recognize the need for project management:
● Capital projects
● Customer expectations
● 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.
Excellence in Project Management. New York: Wiley, 1998, p. 51.v
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.
The fourth life-cycle phase is the Growth Phase, where the organization becomes committed to the development of the corporate tools for project management. This includes the project management methodology for planning, scheduling, and controlling, as well as selection of the appropriate supporting software. Portions of this phase can begin during earlier phases.
The fifth life-cycle phase is Maturity. In this phase, the organization begins using the tools developed in the previous phase. Here, the organization must be totally dedicated to project management. The organization must develop a reasonable project management curriculum to provide the appropriate training and education in support of the tools, as well as the expected organizational behavior.
By the 1990s, companies finally began to recognize the benefits of project management. Table 2–2 shows the benefits of project management and how our view of project management has changed.
Recognizing that the organization can benefit from the implementation of project management is just the starting point. The question now becomes, “How long will it take us to achieve these benefits?” This can be partially answered from Figure 2–6. In the beginning of the implementation process, there will be added expenses to develop the project management methodology and establish the support systems for planning, scheduling, and control. Eventually, the cost will level off and become pegged. The question mark in Figure 2–6 is the point at which the benefits equal the cost of implementation. This point
can be pushed to the left through training and education.
Source : Project management A system approach to planning, scheduling and controlling [EIGHTH EDITION] By HAROLD KERZNER, Ph.D.