Because project management is different from operations management, projects are handled best by people who are trained in project management. This expertise can be obtained by hiring an outside consulting firm that specializes in project management or by developing an in-house group.
Some organizations are designed to execute projects. Often entities contract with engineering and construction companies to design and build their facilities or hire software companies to develop a software solution. The major work processes within these organizations are designed to support the acquisition and execution of projects. Functional departments such as estimating, scheduling, and procurement create and maintain core competencies designed to support projects. The ability of these types of organizations to successfully manage projects becomes a competitive advantage in the marketplace. Organizations designed to produce products or services also use projects. Major activities outside the normal work of the organization’s department or functional units or major activities that cross functional boundaries become a project (a temporary task undertaken to create a product or service that is unique). As economic pressures increase the speed in which organizations must change and adapt to new environmental conditions, leaders are increasingly chartering projects to enable the organization to more quickly adapt. The application of a project management approach increases the likelihood of success as organizations charter a project to facilitate organizational change, to increase the development and introduction of new products or support the merger or divesture of organizational units.
Project management offices (PMOs) have emerged to facilitate development of organizational knowledge, skills, and tools to internally charter and manage projects within the organization. The PMO varies in structure and responsibility depending on the project management approach of the parent organization. On one end of the spectrum, the PMO has complete responsibility for projects within an organization from the criteria and selection of appropriate projects to accountability for project performance. In organizations that make a large investment in the PMO, a large number of new product or process improvement projects are submitted, and the project office develops a portfolio of projects to manage over a given period that maximizes the use of organizational resources and provides the greatest return to the organization.
PMOs can provide various functions for an organization. Some possible functions include the following:
- Project management. Some organizations maintain the project manager within the PMO, assign project managers from other departments, procure contract project managers, or practice a combination of all three.
- Center of excellence. The project office can maintain the organization’s project management policies and procedures, maintain a historical database, maintain best practices, and provide training and specialized expertise when needed.
- Portfolio management. The project office actually supervises the project managers and monitors project performance. Portfolio management also includes prioritizing projects on the basis of value to the organization and maintains an inventory of projects. Portfolio management balances the number and type of projects to create the greatest return from the entire portfolio of projects.
- Functional support. The project office maintains project management expertise to support the project. Estimating, project scheduling, and project cost analysis are examples of functional support.
KEY TAKEAWAYS
- The purpose of an organization can affect its view of the time allowed for projects.
- In an organization, project management can be used to make step changes to take advantage of new technologies or make significant improvements in effectiveness or efficiency.
- Operations managers are long-term focused and process oriented. Project managers are goal directed and milestone oriented.
- Projects can be handled by outside contractors or by an internal group in a PMO.
EXERCISES
- The type of organization can influence the frame allowed for projects.
- Operations managers are focused on , while project managers are focused on the goals of the project.
- If projects are routinely handled internally, the group that manages the projects might be called the (three words).
- A friend of yours has a forty-five-minute commute to work. She decides to spend some time evaluating the different options she has for routes and possible carpooling to reduce the cost or time it takes to get to work. Is this task an example of something that uses the skills of an operations manager, or does it need the additional skills of a project manager? Explain your answer and refer to the definitions provided.
- Business managers focus on improving efficiency and effectiveness, but sometimes they use a project management approach to make significant changes. What often prompts them to use the project management approach? What would be an example?
Operations versus Project Management
The manager of a sales department must meet annual sales goals, manage personnel in the department, and develop and deliver product training for clients. How is this type of operations management different from project management? Address each of the following issues in your answer:
- How is the relationship between the operations manager and the sales staff different from the relationship between a project manager and the project team members?
- Which of the duties described above is most like project management and might be contracted to an outside firm?
- What is the biggest difference between project management and the sales manager’s job?
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