Why was project management so difficult for companies to accept and implement? The answer is shown in Figure 2–7. Historically, project management resided only in the project driven sectors of the marketplace. In these sectors, the project managers were given the responsibility for profit and loss, which virtually forced companies to treat project management as a profession.
In the non–project-driven sectors of the marketplace, corporate survival was based upon products and services, rather than upon a continuous stream of projects. Profitability was identified through marketing and sales, with very few projects having an identifiable P&L. As a result, project management in these firms was never viewed as a profession.
In reality, most firms that believed that they were non–project-driven were actually hybrids. Hybrid organizations are typically non–project-driven firms with one or two divisions that are project-driven. Historically, hybrids have functioned as though they were non–project-driven, as shown in Figure 2–7, but today they are functioning like project driven firms. Why the change? Management 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. 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 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. Companies begin using the principles of project management for the implementation of total quality management (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, but 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 “reengineering” 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.
● 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 over management may be negligible compared to risks of undermanagement. More organizations begin to use collocated teams all housed together.
● 2000: Mergers and acquisitions create more multinational companies. Multinational project management becomes a major challenge.
● 2001: Corporations are under pressure to achieve maturity as quickly as possible. Project management maturity models help companies reach this goal.
● 2002: The maturity models for project management provide corporations with a basis to perform strategic planning for project management. Project management is now viewed as a strategic competency for the corporation.
● 2003: Intranet status reporting comes of age. This is particularly important for multinational corporations that must exchange information quickly.
● 2004: Intranet reporting provides corporations with information on how resources are being committed and utilized. Corporations develop capacity planning models to learn how much additional work the organization can take on.
As project management continues to grow and mature, it will have more allies. 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 be established.
If a company wishes to achieve excellence in project management, then it must go through a successful implementation process. This is illustrated in Situation 2–1.
Situation 2–1: The aerospace division of a Fortune 500 company had been using project management for more than 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. It soon learned that
there were companies that had been using project management for fewer than six
years but whose skills at implementation had surpassed the aerospace/defense firms.
It was a rude awakening.
Another factor that contributed to resistance to change was senior management’s preference for the status quo. Often this preference was based upon what was in the executives’ best interest rather than the best interest of the organization. It was also common for someone to attend basic project management programs and then discover that the organization would not allow full implementation of project management, leading to frustration for those in the lower and middle levels of management. Consider Situation 2–2:
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. 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.
Even though project management has been in existence for more than forty years, there are still different views and misconceptions about what it really is. Textbooks on operations research or management science still have chapters entitled “Project Management” that discuss only PERT scheduling techniques. A textbook on organizational design recognized project management as simply another organizational form. All companies sooner or later understand the basics of project management. But companies that have achieved excellence in project management have done so through successful implementation and execution of processes and methodologies.
Source : Project management A system approach to planning, scheduling and controlling [EIGHTH EDITION] By HAROLD KERZNER, Ph.D.