Class in Session: Project Management

Editor’s note: this post is part of a series on formal project management techniques. For previous posts, click here.

In my last four submissions I defined formal project management and then argued that it decreases risks while saving money and time. If all these great things are true about formal project management, why isn’t everyone practicing it all the time?

There are three reasons why formal project management is not as widespread as it could be.

1. Ignorance – Not everyone is aware that there are better ways to introduce innovation into an organization than the natural or informal project management methods that develop spontaneously.

2. Apathy – People are resistant to change and do not want to fix systems that they perceive to be working “well enough.”

3. Lack of Effort – Formal project management requires discipline in terms of the team and the supporting organization.

Ignorance

Formal project management practices are relatively new to industries outside of construction and manufacturing. A lot of people and organizations are unaware of advances in project management practices such as those documented in the PMBOK (Project Management Body of Knowledge).

There is also a lack of consensus as to what constitutes the best practices. There are numerous organizations worldwide that advocate for their own project management practice standards. A lack of consensus makes it more difficult for newcomers to know what their organization should be doing.

Apathy

Many organizations already have successful project management programs in operation. These organizations – and particularly the project managers operating within them – do not feel the need for, and do not want, more structure and rules. They resist change because the changes do not necessarily serve the interests of the project managers.

Lack of Effort

Those organizations that recognize the benefits of formal project management practices must walk the talk if they are to be successful. Formal project management practices are like formal accounting practices. It will only work if the people involved (both directly and indirectly) make it work. Cooperation and support for formal project management practices start at the CEO level.

Moving from informal project management practices to formal requires effort and discipline. Not every organization is up to it.

Conclusion

Why isn’t formal PM more widespread? Because it is still a relatively new area of management science, which must prove its value to senior management before the discipline necessary for success will be encouraged throughout the organization.

But, it is coming! The benefits are too clear for formal project management practices not to spread far and wide over the coming years.

From Brian Egan

Image from webstockpro.com

Editor’s note: this post is part of a series on formal project management techniques. For previous posts, click here.

Do formal project management practices help projects to finish earlier than informal practices do? Yes and no. Yes, because they ensure that time is well-utilized. No, because they force projects to meet stakeholders needs, not just be finished on time while delivering garbage.

Formal project plans almost always start-out with longer, initial duration estimates than would be the case for informal plans. This is because formal project plans are more likely to include all activities and to estimate with greater precision.

As a result of having longer duration estimates from the outset, formal project management practices are often blamed for “slowing projects down.” The time consumed by detailed planning and stakeholder approval is highlighted as just one of the more obvious delays. Slower decision-making and more complex change management processes are also assumed to cause longer project durations.

The fact is that even if formal project management requires more time up front, it almost always saves time in the long run, because what you plan for is more likely to be what you need. Informal practices may allow projects to get started earlier, but do not save time in the long run.

Informal project management allows work to begin before a formal, detailed and approved plan is in place. Work begins before there is a clear definition of everything that has to be accomplished. The gun is fired before it is properly aimed, so to speak.

Does getting started earlier save time? It may save time in special circumstances but certainly does not in most cases, because the wrong work gets done.

Formal project management practices save time by ensuring that the gun is properly aimed before it is fired. It focuses efforts on satisfying stakeholder needs rather than “getting started.” Formal project management saves time by avoiding wasted effort.

Formal project management accomplishes more, from the stakeholder’s perspective, in a given period of time than informal project management does. Informally managed projects that appear to take less time do so by accomplishing less from the stakeholder’s perspectives. Such projects may finish earlier, but do not deliver exactly what the stakeholders need or want.

From Brian Egan

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Do Formal Project Management Practices Lower Costs?

Yes. It is cheaper to run a project using formal project management practices than without formal rules and procedures, and the cost of having controls in place is less than the cost of the problems that will develop if there are no controls.

In effect, formalizing the project management process is free. It even saves money. Lots of money.

Not everyone would agree, of course. No doubt there are examples of projects that worked out “just fine” without any fancy rules to control the behavior of the project manager (PM). However, I argue that the cost of success for these projects is being judged by the wrong people.

Who Is Measuring Cost?

When comparing the cost of projects with or without formal project management practices, it is necessary to consider whose perspective is being used. Project managers do not consider costs in the same way that the owners of a project do.

Project managers have “destination fixation.” They perceive success to be the completion of a project, on time and within budget. They want to “get ‘er done!”

Project managers like informal project management practices because they gives PMs the freedom to choose how to fulfill project objectives best.

The problem is that “destination fixation” doesn’t necessarily serve the best interests of the initiating stakeholders (owners).

Formal Project Management Means Stakeholder-Focused

Stakeholders want projects to serve their needs; not merely to come in on time and budget. Building something that doesn’t work, or does not fill the need for which it was intended, is not considered to be successful, even if the project is completed on time and budget. It is an expensive mistake.

Formal project management helps to ensure that projects serve the needs of the initiating stakeholders. It saves money by helping to prevent the perpetuation of projects that are motivated by the priorities of the PM or that are driven by operational necessity rather than stakeholders’ needs.

Formal project management saves more money than it costs, by forcing discipline in the planning and execution phases. This discipline helps to ensure that the project serves the interests of the initiating stakeholders and not of the project manager or team.

Formal project management protects the interests of the owners. It is much cheaper than simply hoping that the project management team will get it right.

From Brian Egan

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Does “Formal” Project Management Decrease Risk?

The short answer is, yes. To understand the question, you need to recall my definition of formal project management. I described it as project management with strict rules. In a formal environment, project managers (PMs) must adhere to guidelines, procedures and practices such as those advocated by the Project Management Institute (PMI). Some PMs would argue that guidelines, procedures and practices just increase cost and lengthen the duration of projects. They suggest that informal project management is more cost effective.

Formal Project Management and Accounting

My counter-argument is based on the parallels between project management and accounting. Every project is like a business. Projects are investments. According to the PMI’s definition, projects are investments that have a unique deliverable. If the deliverable is unique, the organization must lack specific experience in the execution of the project. Of course, how inexperienced the organization is depends on the specific situation.

Stakeholder Perspective

So let us say that you owned the company and that it was your money being invested in a project. How structured would you like the planning and execution to be? Would you let a project that was spending your money proceed without a detailed plan? Or without guidelines and best practices to control execution? I am willing to bet that you would not want to. Informal PMs have the freedom to do what they think is best (i.e., to execute a project the way they want), and they argue that this flexibility is in everyone’s best interest. Investors want to know what is being done by whom, why and when. They want rules, reports and analysis.

Formal Project Management Is Accounting and Accountability

How many businesses operate with informal accounting practices? How many businesses allow staff to spend money as they see fit? Virtually none. Why are accounting practices (money controls) so formal? They are kept formal in order to minimize the risk of money being badly spent; to stop people from spending money according to their own set of priorities. Why should project management practices be formal? 1) To minimize the risk of money and resources being badly spent; 2) To prevent projects from spending money and consuming resources according to unspecified priorities.

Formal project management practices serve the interests of investors (stakeholders) who want to be told in advance how their money and resources will be consumed. Formal project management puts the investors in the driver’s seat. Informal project management relegates investors to the role of spectator. Formal project management does not eliminate risk, but it diminishes risk by keeping stakeholders better informed and more involved and by helping to ensure that resources are being wisely spent.

From Brian Egan

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