INTRODUCTION
Executives will be facing increasingly complex challenges during the next decade. These challenges will be the result of high escalation factors for salaries and raw materials, increased union demands, pressure from stockholders, and the possibility of long-term high inflation accompanied by a mild recession and a lack of borrowing power with financial institutions. These environmental conditions have existed before, but not to the degree that they do today.
In the past, executives have attempted to ease the impact of these environmental conditions by embarking on massive cost-reduction programs. The usual results of these programs have been early retirement, layoffs, and a reduction in manpower through attrition. As jobs become vacant, executives pressure line managers to accomplish the same amount of work with fewer resources, either by improving efficiency or by upgrading performance requirements to a higher position on the learning curve. Because people costs are more inflationary than the cost of equipment or facilities, executives are funding more and more capital equipment projects in an attempt to increase or improve productivity without increasing labor.
Unfortunately, executives are somewhat limited in how far they can go to reduce manpower without running a high risk to corporate profitability. Capital equipment projects are not always the answer. Thus, executives have been forced to look elsewhere for the solutions to their problems.
Almost all of today’s executives are in agreement that the solution to the majority of corporate problems involves obtaining better control and use of existing corporate resources, looking internally rather than externally for the solution. As part of the attempt to achieve an internal solution, executives are taking a hard look at the ways corporate activities are managed. Project management is one of the techniques under consideration.
The project management approach is relatively modern. It is characterized by methods of restructuring management and adapting special management techniques, with the purpose of obtaining better control and use of existing resources. Thirty years ago project management was confined to U.S. Department of Defense contractors and construction companies. Today, the concept behind project management is being applied in such diverse industries and organizations as defense, construction, pharmaceuticals, chemicals, banking, hospitals, accounting, advertising, law, state and local governments, and the United Nations.
The rapid rate of change in both technology and the marketplace has created enormous strains on existing organizational forms. The traditional structure is highly bureaucratic, and experience has shown that it cannot respond rapidly enough to a changing environment. Thus, the traditional structure must be replaced by project management, or other temporary management structures that are highly organic and can respond very rapidly as situations develop inside and outside the company.
Project management has long been discussed by corporate executives and academics as one of several workable possibilities for organizational forms of the future that could integrate complex efforts and reduce bureaucracy. The acceptance of project management has not been easy, however. Many executives are not willing to accept change and are inflexible when it comes to adapting to a different environment. The project management approach requires a departure from the traditional business organizational form, which is basically vertical and which emphasizes a strong superior–subordinate relationship.
UNDERSTANDING PROJECT MANAGEMENT
In order to understand project management, one must begin with the definition of a project. A project can be considered to be any series of activities and tasks that:
● Have a specific objective to be completed within certain specifications
● Have defined start and end dates
● Have funding limits (if applicable)
● Consume human and nonhuman resources (i.e., money, people, equipment)
● Are multifunctional (i.e., cut across several functional lines)
Project management, on the other hand, involves project planning and project monitoring and includes such items as:
● Project planning
● Definition of work requirements
● Definition of quantity and quality of work
● Definition of resources needed
● Project monitoring
● Tracking progress
● Comparing actual outcome to predicted outcome
● Analyzing impact
● Making adjustments
Successful project management can then be defined as having achieved the project objectives:
● Within time
● Within cost
● At the desired performance/technology level
● While utilizing the assigned resources effectively and efficiently
● Accepted by the customer
The potential benefits from project management are:
● Identification of functional responsibilities to ensure that all activities are accounted for, regardless of personnel turnover
● Minimizing the need for continuous reporting
● Identification of time limits for scheduling
● Identification of a methodology for trade-off analysis
● Measurement of accomplishment against plans
● Early identification of problems so that corrective action may follow
● Improved estimating capability for future planning
● Knowing when objectives cannot be met or will be exceeded
Unfortunately, the benefits cannot be achieved without overcoming obstacles such as:
● Project complexity
● Customer’s special requirements and scope changes
● Organizational restructuring
● Project risks
● Changes in technology
● Forward planning and pricing
Project management can mean different things to different people. Quite often, people misunderstand the concept because they have ongoing projects within their company and feel that they are using project management to control these activities. In such a case, the following might be considered an appropriate definition:
Project management is the art of creating the illusion that any outcome is the result of a series of predetermined, deliberate acts when, in fact, it was dumb luck.
Although this might be the way that some companies are running their projects, this is not project management. Project management is designed to make better use of existing resources by getting work to flow horizontally as well as vertically within the company. This approach does not really destroy the vertical, bureaucratic flow of work but simply requires that line organizations talk to one another horizontally so work will be accomplished more smoothly throughout the organization. The vertical flow of work is still the responsibility of the line managers. The horizontal flow of work is the responsibility of the project managers, and their primary effort is to communicate and coordinate activities horizontally between the line organizations.
Figure 1–1 shows how many companies are structured. There are always “class or prestige” gaps between various levels of management. There are also functional gaps between working units of the organization. If we superimpose the management gaps on top of the functional gaps, we find that companies are made up of small operational islands that refuse to communicate with one another for fear that giving up information may strengthen their
opponents. The project manager’s responsibility is to get these islands to communicate cross-functionally toward common goals and objectives. The following would be an overview definition of project management:
Project management is the planning, organizing, directing, and controlling of company resources for a relatively short-term objective that has been established to complete specific goals and objectives. Furthermore, project management utilizes the systems approach to management by having functional personnel (the vertical hierarchy) assigned to a specific project (the horizontal hierarchy).
The above definition requires further comment. Classical management is usually considered to have five functions or principles:
● Planning
● Organizing
● Staffing
● Controlling
● Directing
You will notice that, in the above definition, the staffing function has been omitted. This was intentional because the project manager does not staff the project. Staffing is a line responsibility. The project manager has the right to request specific resources, but the final decision of what resources will be committed rests with the line managers.
We should also comment on what is meant by a “relatively” short-term project. Not all industries have the same definition for a short-term project. In engineering, the project might be for six months or two years; in construction, three to five years; in nuclear components, ten years; and in insurance, two weeks. Long-term projects, which consume resources full-time, are usually set up as a separate division (if large enough) or simply as a line organization.
Figure 1–2 is a pictorial representation of project management. The objective of the figure is to show that project management is designed to manage or control company resources on a given activity, within time, within cost, and within performance. Time, cost, and performance are the constraints on the project. If the project is to be accomplished for an outside customer, then the project has a fourth constraint: good customer relations. The reader should immediately realize that it is possible to manage a project internally within time, cost, and performance and then alienate the customer to such a degree that no further business will be forthcoming. Executives often select project managers based on who the customer is and what kind of customer relations will be necessary.
Source : Project management A system approach to planning, scheduling and controlling [EIGHTH EDITION] By HAROLD KERZNER, Ph.D.