As business environments become increasingly competitive, organizations need to improve their performance to successfully compete in the global marketplace. They need to utilize their resources effectively and efficiently i.e. they need to do more with less; provide products and services faster, cheaper, and better (Dennis, 2007) and make sure that they do it right the first time around.We will write a custom Project Management Definition and Importance specifically for you
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Projects are essential for organizational growth and survival as they create value through improved business processes and development of new products and services (Burke, 1999). This allows companies to respond to quickly and accurately to changes in the environment, competition and the marketplace. Project management is the key strategic tool to help organizations achieve the above results by selecting, managing and supporting only those projects that meet the organization’s strategic objectives, keep it competitive and return maximum shareholder value. As various initiatives compete for scarce financial, time and human resources, strategic project management provides a rational decision framework (Young, 2005), which allows decision-makers to make correct project investment choices.
More than just delivering a project on time and within budget, project management is a systematic process to start, plan, execute, control, and complete a project. It is about detailed planning, teamwork, effective and efficient task achievement and a focus on best organizational practices (Paul, 2005) which result in strict execution of projects, lower costs, growth and improved profitability.
How Project Management Helps Organizations Achieve Strategic Objectives
Project management reduces risks and costs to result in improved quality, profitability and returns on investment (Joseph, 2003). It accomplishes this by:
- Using a rational decision framework for the project selection process.
- Linking project selection to strategic objectives.
- Prioritizing project proposals across a common set of criteria.
- Allocating resources only to projects that align with strategic direction.
- Managing the portfolio risk.
- Avoiding projects that are at odds with the organizational strategy.
- Developing buy-in from all team-members (Maylor, 2003).
Effective project management that is built into the organizations system rather than a mere overture allows project costs and resources and teams to be managed to result in the following outcomes:
- Improved Productivity.
- Projects remain within Budgets.
- Improved Corporate Communication.
- Monitoring Project Milestones and Deliverables.
- Decreased Risk.
- Improved Product Quality.
- Streamlined Decision Making.
- Satisfied Clients and Customers.
Companies are in business to make money: The more goods and services they can provide the more money they can make. Thus all companies are on the lookout for ways to boost organizational productivity and produce greater output per unit of time. Not only does this reduce cost per unit but also increases the revenue (Martins, 2002). Project managers ensure that tasks are assigned to every available resource along with deadlines.
The result is that there is no ambiguity about what needs to be done by whom at any point of time and with clearly defined milestones, deliverables and objectives, there is constant tracking of individual performance (Boddy, 2003). This results in reduced time wastage and ensures that the required work is completed within its time (Fields, 1998). The project manager will be warned when a project is behind schedule, a deliverable is missing or when a resource has been overwhelmed through over-allocation and is able to take timely corrective actions. 2- Projects remain within Budgets:Get your
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Effective project management does a thorough estimation of the costs of completing a project, taking into account team input to create a comprehensive project budget (Nicholas, 2004). By constantly tracking the expenses to the budgeted amount for the areas identified, project managers are able to identify over-runs and rectify the situation before it gets out of hand. Also by ensuring that the project is completed in a timely manner, the chances of the costing being increased due to delays and changes in vendor costs due to validity expiration are reduced.
Improved Corporate Communication
Open communication ensures that tasks are completed smoothly because team members understand what they should be doing and why. They know their deadlines and there are no surprises. Project management facilitates communication between team members, officemates, and clients and companies which in turn facilitates task accomplishment. Project plans usually include a communication plan which describes when and how frequently a communication is to occur, who will be involved with it and the means through which the communication will occur (Gray, 2003). This will result in regular reviews and updates of the project and timely identification and resolution of risks and setbacks.
Monitoring Project Milestones and Deliverables
Project management tools emphasize follow-up and compare actual performance to planned, This allows managers to know exactly where they stand with regard to the degree of completion. Projects that are carefully monitored are more likely to be successfully completed as problems and roadblocks are identified in a timely manner and may be rectified early on. Project management tools such as Gantt charts, follow-up meetings and action item management methods assign deadlines and responsibility for each deliverable. Tracking these ensures that the tasks get done in a timely manner. The result is that productivity goes up, costs go down, and projects are completed on-time (Clarks, 2005).
During the execution phase, the key responsibility of the project manager is to track performance to the plan by monitoring actual start and finish dates of tasks, the actual cost vs. the estimated cost, resource allocation and workloads and progress on deliverables.
The likelihood of an unwanted event occurring and the severity of its impact are described as a risk. It is important to assess risks and develop mitigation plans; else they can cost the company money, resources and time. Risk management is built into project management and is the process of identifying, analyzing and mitigating project risks allowing project managers to foresee potential risks and develop plans to combat them. This reduces the time spent in resolving the problem if it transpires as well as containing the resultant damage. Risk management consists of risk identification and prioritization. This is followed by a risk reduction plan which outlines the organizational response to the risk if it occurs and delegates the responsibility for dealing with it to a team member.
Improved Product Quality
A product quality improvement is usually why new projects are undertaken as quality products are more reliable and create and retain customers for a business. Project management involves planning and developing the product as per the objectives identified, testing it to ensure that it meets the required performance levels and releasing the product in a timely and systematic manner. A popular project management method famous for its focus on product quality is Six Sigma which increases satisfaction by eliminating defects in the product. Project management makes quality improvement a goal, breaks it down into smaller, achievable deliverables and milestones and tackles each deliverable independently, thus increasing the likelihood of improved quality.
Streamlined Decision Making
Project management ensures that detailed analyses are completed during the planning phase of project management and decisions are taken based on the results. Tools used to aid decision-making include Pareto Analysis, Decision Trees, Cost/Benefit Analysis as they support managers in choosing between multiple alternatives based on key objective criteria such as costs, benefits, the time required, work required etc.We will write a custom
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Risk analyses identify and measure risks and develop plans to be made for their mitigation. Doing so improves decision making in case the risk actually transpires and reduces the damage due to poor decision making made in the heat of the crises. Project management also lays out the responsibility for decision making for each area and thus reduces the confusion due to multiple points of views.
By basing decisions on transparent and objective criteria, project management also reduces that chances that decisions may be made due to personal/political reasons which may affect the organizations objectives adversely while consuming organizational resources.
Satisfied Clients and Customers
If the ultimate goal of the business is to make sustainable revenue then the best way to do so is investing in its customers’ satisfaction. Giving the customer what they want leads to them being satisfied with the organization’s value proposition. Customer satisfaction leads to brand loyalty which is critical for customer retention, increased sales and long term growth. Organizations use project management, they pick those projects that add strategic value to them.
This usually translates into those projects which reduce cost, improve productivity/quality or further enable the company to be competitive by meeting customers’ needs. Thus project management ensures that the customers needs/wants are at the centre of project decision-making. Project management tools then further assure that these projects are completed effectively and efficiently, thus ensuring that customers ARE given the value they want whether it is in the form of reduced costs or improved value proposition. Conclusion: Achievement of Strategic Objectives:
In conclusion project management ensures that only those projects are selected which are in line with the organizations’ long term strategic objectives. And then through a process of rigorous planning, execution, follow-up and analysis, project management ensures that these objectives are attained in a manner that best utilizes the organization’s resources and greatly improves the likelihood of success.
If built into the organizations ‘way of doing business’ rather than used only as an infrequent tool, project management greatly increases an organization’s competitiveness in the market and makes its success sustainable.
Due to the contributions that project management makes to organizational success, more and more organizations, both large and small, corporations and sole-proprietorships are now buying into it as a means of achieving their strategic objectives. Project management applications were initially relegated to logistics, R & D and operations but are now being extended to activities within service functions such as sales and HR due to the fact that they ensure that tasks are completed and the objectives are attained.Not sure if you can write
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Boddy D. (2002) Managing Projects – Building and Leading the Team, NewYork, Prentice Hall.
Burke, R. (1999) Project Management :Planning and Control Techniques. 3rd Ed., Wiley, Chichester.
Clarks, A. (2005) Project Organization and Management, Oxford, Oxford University Press.
Dennis Lock (2007) Project management. 9th ed.Guildford, Gower Publishing Ltd.
Field M. & Keller R. (1998) Project Management. The Open University, Thomson Learning Center.
Gray, F. C. Larson, E.W., (2003) Project Management: The Management Process. Chicago, McGraw-Hill Publishers.
Joseph P. (2003). PMP Project Management Professional Study Guide. Chicago, McGraw-Hill Professional.
Maylor, H. (2003) Project Management.3rd Ed. New York, Prentice Hall.
Martin S. (2002). Project Management Pathways. Association for Project Management, APM Publishing Limited.
Nicholas J.M. (2004) Project Management for Business and Engineering – Principles & Practice .2nd Ed. Netherlands, Elsevier Ltd.
Paul C. Dinsmore et al (2005) The right projects done right. New Jersey, John Wiley and Sons.
Young-Hoon K. (2005). “A brief history of Project Management”. In: The story of managing projects. Westport, Greenwood Publishing Group.