The Corporate Advantages of a Project Management Process

A Project Management (PM) process is a process that wraps sound and repeatable structure around a series of events that lead to a projects completion or implementation. In most cases, you will see a structured diagram that lists the project management process groups used to manage a project. I have been fortunate to study and review many PM processes over the years from the Department of Defense to State and Local government processes. In addition, I have studied and reviewed PM processes in business enterprises, banking, health care and nuclear power. What I want to present, is the concept of the Project Management Process and why is it beneficial to have one in place in your organization.

In most cases Project Management (PM) processes actually serve a purpose in an organization by providing a PM process methodology in an environment where one did not formally exist. Though a corporation may have a SDLC (Systems Development Life Cycle) documented, these are specific to systems and application development and not project management. It should be kindly noted that projects are not exclusive to an Information Systems Department. It should also be noted that not all SDLC’s properly reflect PM Processes.

According to the PMBOK (Project Management Body of Knowledge), “A project is a temporary endeavor undertaken to create a unique product, service, or result. These temporary and unique characteristics determine if a particular endeavor is a project.” With that in mind, projects can exist in many areas of an organization and many times they do, with the caveat that they may not be treated as a project under the guidelines of a “Project Management Process.” If projects exist without a PM process to reference, though they can be successful, often times these projects are managed in chaos.

The purpose of a PM process is to provide organizations and project managers with a structure and format that is common and repeatable, the PM process is not specific to a business unit or corporate department. The PM process should be used by all departments for projects specific to them or for projects that reach across multiple business units.

In a corporate process diagram, each process group could refer to associated project templates that can be completed and used for project documentation. Typically project documentation will consist of …

1. The Project Charter

2. The Project Goals

3. A Case Summary

4. Stakeholder Analysis

5. Project Scope Documentation

6. Project Requirements Documentation

7. A Responsibility Matrix

8. A Project Plan

9. A Communications Plan

10. A Risk Plan

11. Meeting Minutes

12. And Status Reports

This is not an all inclusive list but it gives you an idea of some of the types of documents you should have for a formal project.

Let us review a situation where project management is not used, what are some of the pitfalls? An Information Systems Department is typical in many organizations so a software application will be used for this example. In this case, without any PM processes used, you can expect the project to be poorly documented or in some cases not documented at all, and most likely in a state of constant change. In other words, you start out with a business user meeting with a manager and/or application developer with … we want the application to do this, and the requester presents what they want the application to do. At some point in time the requester returns and asks for additional functionality. That gets noted and acted upon. This cycle continues until the requester feels satisfied and the application is approved and moved into production.

So far, in the development phase we can see from this example that the project is uncontrolled forcing the developer to be in a reactive vs. proactive state. What can occur next is often expected without a PM process. The application goes into production and suddenly something is not working as expected. This could be caused by several factors. It was not fully tested before it went into production because there was no documentation to reference to create a test script. Or, the requester is looking for functionality that they did not ask for or forgot to ask for and there is no documentation to reference that identifies what did or did not take place. There could be other reasons but the outcome is the same, discouragement, disgruntlement, along with additional time and costs to complete the project.

Once again, in this example we see the project resources in a reactive state, uncontrolled by any formalities thus chaos exists. The reality of this example is the fact that the resources are not being effectively utilized and the corporation will pay for those additional costs financially and emotionally. Trust me, if the majority of your corporate resources are operating in this chaotic state, it will have a work-life balance drain on them. Additionally, the quality of the product is not managed effectively, thus the corporation will end up paying for that also. The productivity of the project resources is also at stake, and yes, there is a cost associated with that.

If we take this example and wrap a PM process around it we end up with different results. We would create and maintain solid and documented project requirements. Project requirements will be used to develop your future test methods, with the requirements fully documented, the information you need to test for in your application is already in your hands. The project manager could begin with the end in mind and work backwards to complete the project schedule. With software applications, incorporating the SDLC structure into the plan is good but be sure to gather the business user(s) needs and requirements and get those into the plan as well.

At this stage, we have already improved the process, documentation can be referenced to develop the application and the same documentation can be used to create the test cases. Suddenly, it is realized that we need to add a function to the application that was not in the initial project scope, this is where process kicks in. This is commonly referred to as change control, used effectively, a change request is made and before it is acted upon it needs approval. Once approved, this change is documented as part of the project requirements, so that it can be developed but also tested in the application testing process. It is also added to the project plan and monitored accordingly. (Please note that I have not gone into the risk factor discussion here, that is the subject of a future article)

PM processes provide a structure of managing information needed for the successful completion of a project. When I say “successful completion” I am referring to the triple constraints of project management which are the project cost, schedule and scope which wrap around project quality. If the outcome of a project is not up to par with the quality objectives, no matter how well things went, the project could be categorized as a failure.

In my research I have learned that as an organization implements a PM process or methodology, there are associated corporate REAL DOLLAR cost savings. For example, the median cost of a project can be reduced by up to 75% over an undocumented process. The project schedule can be reduced by close to 40%. The project resource time can be reduced by up to 75%. Then there is the quality consideration, the number of defects can be reduced by 80%. These cost, time and quality savings occur when an organization is diligent in the implementation of a sound project management process. As an organization matures in the use of project management there are additional cost, time and quality savings.

Let’s take a moment to put the above savings into the actual numbers. The studies indicate that if you use a project management process, that your $100,000 application could have been developed for $25,000. That is quite a substantial savings just on the budget, and you have $75,000 to spend on other initiatives. If a project schedule can be reduced by up to 40%, which means the 20 week project schedule can be reduced to 12 weeks. With this in mind, now you have money and time to work on other initiatives. Next is project resource utilization, with up to a 75% savings, what took your resources 800 hours to accomplish now takes 200 hours to accomplish. Now you have additional time, money and resources for other initiatives. But wait, there’s more (as this sounds like an info-mercial), the number of defects is reduced by up to 80%. What may have been 20 product defects ends up to be 4 defects. You end up with additional time, money and resources with less product defects. What is going on in your enterprise?

We are in a time when enterprises look specifically to increase business efficiencies by streamlining processes. IT managers are asked to maximize a systems ROI and align Information Systems with the goals of the business. In order to effectively accomplish this, C-Level executives down the ranks to IT managers need to understand how processes such as project management and others, impact the overall cost of systems and applications.

In challenging economic times, corporations that have sound PM processes in place (in addition to other sound business processes) are capable of focusing their efforts on controlling corporate costs and increasing profits using traditional methods. Compare this to organizations that need to control costs and increase profits in addition to improving business performance, improving business information, improving security, improving efficiencies and improving service to customers, suppliers, partners and employees. The operational costs for the latter corporation will be staggering compared to the corporation that has sound processes in place. Without sound PM processes in place, while projects are developed in chaos, they may be completed by sheer heroics. There is a corporate cost to operating under this method, my recommendation is to know the difference and make the right decision.

In my next article, I will be discussing project management solutions that can help alleviate some of the pains that corporations can endure during a time of financial concerns. More information about me is available via Linkedin, feel free to look up William M. Thom – MISM, PMP.

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Implementing an Effective Strategic Management Process – Get All Stages of the Process Working

Businesses could perform better by managing more strategically. The emphasis here, when discussing strategy, should be on managing, and not just on planning. Many companies limit their strategic thinking to their planning cycle. Strategic planning is certainly important, but it is only one part of an overall strategic management process. An effective strategic management process just simply leads to sustained growth and profitability. The purpose of this brief article is to explore one of the key success factors that can make a real difference in performance when implementing a strategic management process. That is, a company will be more successful if it gets all stages of the process working, even if imperfectly.

The structure of a strategic management process can be described as having four major stages:

Definition Stage, which culminates in a defined market strategy.
Translation Stage, which deals with business philosophy.
Building Stage, which has the goal of designing effective performance measurement.
Operating Stage, which sets up an environment for continuous improvement.

In order to get all stages of the process in place, at least to some degree, companies may need to think more broadly, and focus less on perfecting any individual stages in the process. Many companies may find this difficult. Many companies seem to have a tendency to focus on the technical, rather than think broadly about the conceptual. In many cases, that natural tendency may be the correct one. However, when dealing with a strategic management process, it is often the wrong one. The effectiveness of a strategic management process comes from implementing the overall process. Improvements to individual stages can be done after the overall process is implemented.

To understand the need to have all stages of the process working, one needs only to consider the impact on performance if a stage is missing. Two stages that are often missing at companies are the second, or Translation, stage and the fourth, or Operating, stage. Let us consider each of them in a little more depth.

The Translation Stage

Oddly enough, many companies, even companies that do a good job on the first, or Definition, stage, miss the Translation Stage entirely. Those companies may have developed an effective market strategy during the first stage of the process, but they fail to translate it into what it means for their relevant stakeholders, such as customers, suppliers, shareholders, and employees. Consider a company that may have defined an unique, effective, competitive market position, but they have not aligned the way their sales force are approaching customers with that market strategy. In essence, the company is keeping its market strategy a secret from its personnel who are in the market every day. In order to be effective, a market strategy must be well understood and accepted by all stakeholders, and that is accomplished during the Translation Stage.

The Operating Stage

The purpose of the Operating Stage is to create a continuous improvement environment that enhances the overall business strategy of a company and provides feedback to the other stages of the strategic management process. Few companies have implemented a continuous improvement program, and in those cases where they have, it is rarely connected to their strategic management processes. Business strategies become more effective when they are refined and strengthened over time through continuous analysis and development of insights. That is accomplished in the Operating Stage.

When all stages of a strategic management process are in place, even if imperfectly, the results achieved by companies can improve dramatically. Two stages that are often missing from the strategic management processes of many companies are the Translation Stage and the Operating Stage. When one considers the potential impact of these two stages on companies’ performance, it is surprising that there are many companies where they do not exist. For a more effective strategic management process, get all stages of the process working.

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Strategic Management Process – The Building Stage

If a business operates according to a sound strategic management process, by this point in the process the business has defined a market strategy that differentiates it from competitors and leverages its core strengths. It has also taken the necessary steps to internalize its market strategy with all stakeholders of the business, including customers, suppliers, employees, and owners. In addition, and this is the best part, the business should now start seeing improvements in its revenue and profitability. This is always an exciting time for a business. Morale is beginning to run high throughout the organization. A new strategic direction has been implemented, and it is leading to growth in revenue and profits. That makes everyone happy and creates a positive environment within which to proceed with the next stage of the strategic management process – The Building Stage.

One might ask, if revenue and profits are already growing at this point, why go further? Why do we even need The Building Stage? Well, even though the results from a properly executed strategic management process are beginning to show during The Building Stage, the business still needs to do the work necessary to optimize those results and to sustain them over the long-term. That work takes place in The Building Stage. The underlying theme for The Building Stage is performance measurement. Performance measurement is the tool that measures and rewards people and business units for operating in a manner consistent with the business’s market strategy. Quite simply, the performance measurement process should reward behavior that leverages and solidifies the business’s market strategy. There are two components of The Building Stage that deserve further discussion – Management Accounting Policies and the Performance Evaluation Process.

Management Accounting Policies

Management accounting policies can be an effective strategic management tool. Management reports, or internal profitability and performance reports, are created based on a set of defined management accounting policies. Therefore, the management accounting policies must be designed properly for management reports to be successful. In addition, management accounting policies communicate what is truly important for raises, bonuses, and promotions better than any other internal communication vehicle. Here are a few keys to designing a successful set of management accounting policies.

Ensure collaboration right from the beginning. A broad working group, composed of representatives of all business units, cost centers, and support groups, should be formed to review and approve all policies. Disagreements should be presented to senior management for resolution. A strategist should chair the working group to ensure that all policies enhance and underscore the business’s market direction. The decisions that this group make will spread through an organization extremely quickly.

Be thorough. All units, groups, and individuals to the extent possible, should be covered by the management accounting policies. For units that are not revenue centers, measures of productivity and quality should be defined that are consistent with the business’s strategic direction.

Handle complex issues. There are many complex issues that must be handled correctly within the management accounting policies, and none of them should be ignored. Authorities within the organization must be defined, because measurements should reflect only those items that the unit, group, or individual has the full authority to change. In addition, items such as investments, risks, and use of capital, must be handled within the scope of the management accounting policies to ensure equitable and long-range measurements.

Distribute the policies broadly within the organization. There are multiple internal audiences for management accounting policies. Senior management should be able to view and understand the principles and concepts underlying the policies. In addition, people working on the production of management reports need details of exactly how each item is to be handled in reports. Broad internal distribution of the policies allows everyone to understand how their performance will be measured.

Management accounting policies must be in sync with a business’s strategic direction. They communicate to everyone in the business how they will be measured, and they establish a foundation for an effective Performance Evaluation Process.

Performance Evaluation Process

From a strategic process perspective, it is essential that performance evaluations mirror the measurements that have been created in management reports. This is true for performance ratings, as well as for raises, bonuses, and promotions, that go along with them. This ensures that the performance evaluation process underscores the business’s strategic direction and market strategy.

Of course, there are always subjective criteria that should be factored into performance evaluations, but their impact on ratings and compensation should be kept to a minimum. Allowing subjective criteria to significantly affect ratings and compensation will just simply destroy the credibility of the entire process.

After a business has defined an effective strategic direction and market strategy, and it has internalized that strategy within the organization, it is time to create the environment within which to optimize the strategy and sustain it over the long-term. That takes place in The Building Stage of a strategic management process. The Building Stage is focused on creating performance measurements that are in sync with the business’s strategy, and rewarding those in the organization that have succeeded in implementing and enhancing the strategy. This should establish a foundation for growth in revenue and profitability for many years to come.

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What Are the Project Management Process Groups?

Part 3

Earlier Parts

In Part 1 explained the differences between project life cycle and project life span.
In Part 2 we discussed the differences between phases and stages and how each term is used.

Part 3

In today’s post, we will address the group of project management processes, a term made popular by the PMBOK Guide, published by the Project Management Institute (PMI).

Process Groups

The following are the main points related to process groups:

The process groups is a term used to refer to groups of processes.
Each group consists of two or more processes.
This term is made popular by the Project Management Institute (PMI®) since it is a foundation element in the PMI Project Management Framework, which is described in A Guide to the Project Management Body of Knowledge (PMBOK® Guide).
The process groups are used to help us manage a project or a phase of a project.
These process groups are called: Initiation, Planning, Executing, Monitoring & Controlling, and Closing.
They are derived from the quality cycle of plan-do-check-act.
Together, these process groups have 42 processes; per the 4th edition of the PMBOK® Guide.
If we are not mistaken, the five process groups have been around since the original PMBOK® Guide was published in 1996 (as a guide); the same groups.
However, the number of processes within these groups has changed over time; current version has 42 processes; earlier versions had more or less processes.
It is also possible that specific processes can shift from one process group to another; between subsequent editions of the standards.

How to use the process groups?

Basically the processes of these process groups repeat in every stage of the project. we apply them during stage initiation, stage planning, stage execution, stage closing, and stage monitoring and controlling (throughout the stage). Once we conclude a stage and move to the next one, we repeat the processes.

What are some of the processes

As we mentioned there are 42 processes. What are some of them?

Let us focus on risk management processes; as an example. In risk management there are 6 processes; 5 of them are planning processes and ideally they are sequential. For example, there is a process to establish the risk management plan. Next there is a process to identify risks. Once we identify risks there is a process to prioritize the risks bases on qualitative analysis… and so on.

Closing Comment

Through the above we have only focused on explaining the process groups in as simple terms as possible. For further reading, refer to the PMBOK® Guide.

In the next post we will focus on comparing Phases/Stages with Process Groups and discuss a common misunderstanding and a common misuse of these concepts that a large number of project management practitioners, even those who hold certifications, are making.

Stay tuned!

Mounir Ajam

Mounir A. Ajam is eager to awaken the giant of project management within individuals, organizations, and nations! He is an international speaker, author, consultant, executive coach, volunteer leader, entrepreneur, and social entrepreneur.

Mounir experience is global and has had the opportunity to work and live in the United States, United Kingdom, South East Asia and West Asia. Mounir is the co-founder and CEO of SUKAD FZ-LLC a leading provider of Integrated Project Management Solutions that is based in Dubai, the United Arab Emirates.

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Business Process Vs Project Management Process

All attendees of “Project Management… by the Numbers” know that every project is a project within another project(!). In other words, every project we manage is a part of another bigger project. So, what is the difference between a business process and a project management process?

Let’s begin the answer with an example…

The CEO of the organization believes the project is to bring a new product to market. Let us call the product the Wireless Internet Waffle Iron (WiWi).

The CEO knows he/she has a process to get the WiWi though his company. This includes identifying the best possible WiWi and all the way to sustaining the WiWi when it is sold to the consumer.

The company has a published plan based on stages for this process (for example; Stage 1 – Ideation, Stage 2 – Assessment, Stage 3 – Feasibility, Stage 4 – Development, Stage 5 – Commercialization, Stage 6 – Sustainment), in order to get the WiWi from one stage to another.

Most often, the process progresses by passing the responsibility of the project from one group to the next along the way of each stage. It does make sense that Engineering manages the conceptual work and Marketing manages the marketing.

Because of this process, the CEO passes the project to his direct reports with confidence that the project can now be managed on time, on budget and that the Wireless Internet Waffle Iron will be exactly as envisioned.

Working with my clients, I have identified this scenario hundreds times over the years and it is easy to recognize this as a “business process” as this is how the business (company) views the work as a project.

Now, back to our scenario…

The WiWi project is running behind schedule because the assessment stage took longer than planned and the project is running over budget because the feasibility stage was not properly analyzed up front. Now you (the next project manager in line) have been assigned the development stage and are expected to bring the project back on time and schedule as well as manage all the work the development stage requires.

All this time the CEO continues to have confidence in his people and processes that the WiWi project will be on time, cost and objectives. You are backed in the corner with this (can’t let the CEO down) and have to cut corners as they did during the feasibility stage.

After some major frustration, a few all-nighters and some creative reporting, you breathe a sigh of relief and can pass the project with all of its problems to the next group in the process line. Unfortunately, the WiWi is still over budget and running even later.

What we have described above is a classic business process that is mistaken for a project management process. The difference is that the business process sees the product as the project, not the stages or even the tasks as individual projects.

Business processes are absolutely necessary for management to plan and work from, but if we view each stage and task as a project, and the leader of each stage and the doer of each task as a project manager, then we will have an accountability chain within the project. Back to our scenario… but this time as a Project Management Process.

The Four Phases of a Project Management Process…

Phase One – Concept/Feasibility

The WiWi has been dropped into the business process by the CEO. The person that is leading the Ideation Stage must consider this stage a project within itself, and themselves as the Project Manager.

Ideation is a part of the WiWi project, but has its own separate time, cost and objectives. These must be defined and agreed to by the Ideation Phase Project Manager and a Project Customer (maybe the Project Customer has to be the CEO!).

Before agreement can happen, the Ideation Stage Project Manager has to be convinced his/her part of the WiWi Project can be accomplished within the time, cost and objective constraints given. In order to determine the true TCO vs. the goal TCO, each member of the Ideation Project Team must view their tasks as projects with themselves as the Task Project Manager and the Ideation Stage Project Manager as their Project Customer. Each person then follows the same project management process to gain agreement that their tasks can be accomplished to the individual time cost and objective constraints given.

When the entire team agrees all tasks can be done based on individual concept/feasibility studies, agreement can be reached or negotiated between the Ideation Stage Project Manager and the WiWi Project Manager.

Wahoo – Phase 1 done!

Phase Two – Organization/Schedule

The Ideation Stage Project Manager now has agreement at a high level to TCO of the Ideation Stage, so it is time now to do detailed planning and scheduling of the Ideation Stage Project of the WiWi Project.

After reconfirming tasks and team members schedules, a critical path analysis is completed by the Ideation Phase Project Manager (including detailed costs) and run by the Ideation Phase Project Customer for another agreement and:

Phase Three – Execution

Double Wahoo – It’s time to actually do all the Ideation Stage tasks.

The Ideation Stage Project Manager manages the critical path tasks, people and budget, and in turn delivers the Ideation Stage Project to the Project Customer.

The Ideation Stage is almost complete (not quite, but almost) because:

Phase Four – Review/Audit

Now it is time to review the project management during the Ideation Stage Project. Did we do enough concept/feasibility? Did the team members follow-through on their promises? How can we improve the project management process? Etc.

Your part of the WiWi Project, the Ideation Stage Project, has been successfully managed by using a project management process. I think a party is now in order, don’t you?

So, back to our original question: What is the Difference between a Business Process and a Project Management Process?

The answer: The difference is that the business process sees the product as the project, not the stages or even the tasks as individual projects.

We as everyday project managers are responsible for the successful completion of the time, cost and objectives of our piece of the Wireless Internet Waffle Iron Project, not the whole thing.

If you are the CEO (or the CEO’s designated authority) and want the WiWi on time, on cost and on objectives, then consider each stage within the business process a project and allow the project management process to work.

But for now, back to us, the Project Managers. When you get your assignment, whether it is a stage or a task, ask who your Project Customer is and stick to the four project management phases of your specific work.

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