New
Developments in Project Management
Yanping Chen, PhD
University of Management and Technology
1925 N.
Lynn Street, Suite 306
Arlington, VA 22209 USA
In
this paper, I will summarize the development of project management over the past
two decades. I use the expression "new project management" to characterize
project management since the 1990s. This new project management stands in marked
contrast to the traditional project management that endured from the 1950s
through the 1980s.
Traditional
Project Management
People have been undertaking projects for a long
time. Evidence of their ability to carry out major projects is found throughout
the world in places like China, Egypt and Rome. In China one example of a major
project is the Great Wall, the principal parts of which were built in the third
century BC. The Egyptians build the Pyramids in about 2,500 BC, while the Romans
carried out their dramatic engineering feats more than two thousand years
ago.
While humans have been undertaking projects for many years, they have
only engaged in project management since the time of World War II. The most
famous project of this time was the American Manhattan Project to build an
atomic bomb. This project was so complex and urgent that the US military had to
develop a conscious approach to managing schedules, the allocation of resources,
and budgets.
The Americans were not alone in inventing the foundations of
project management. In Germany, for example, management techniques were
developed to implement major weapons development efforts, such as the building
of rockets, while in Japan project management methods arose to build large
capital ships. Project management and an explicit discipline was, then, a child
of the Second World War.
After the war, the defense sector continued to
play a leading role in project management with the onset of the Cold War. During
this time, the US Navy developed the most famous technique of project management
- PERT, or Program Evaluation and Review Technique - to schedule the Polaris
Missile submarine program. A little later, the US Department of Defense created
other basic methodologies such as Work Breakdown Structures (WBSs) and the
earned value method to deal with the complexities of building large and complex
weapons systems.
During the 1950s, the construction sector also played a
leading role in promoting project management. So from the 1950s through the
1980s, project management was seen to lie in the domain of the military and
construction sectors. During this time, the project manager's job was seen to be
straight forward - to implement solutions developed by other people (e.g.,
designers, engineers, architects). Project managers were like dependable
soldiers, and held the following view: "Give me my orders, and I will march to
them."
During this time, the key competencies of project management focused
on the following four areas:
· Scope management - a focus on "big picture"
issues of concern to the project overall (e.g., managing changing
requirements, creating the WBS)
· Time management - a focus on scheduling
project efforts with techniques such as Gantt charts, PERT/CPM networks, and
earned value techniques
· Cost management - a focus on a wide range of
cost-related issues, including cost estimating, accounting, capital budgeting
techniques, and standard budgeting
· Human resource management - a focus on
the human aspect of managing projects, dealing with topics such as personnel
policy, conflict management, motivation, and managing in the matrix
environment.
The New Project Management
In the 1980s, interest in
project management spread to other industries, including telecommunications,
computer, software, pharmaceuticals, finance, investment banking, and energy.
Companies such as AT&T, NCR, IBM, Motorola, Phillip Morris, Citibank, Morgan
Stanley, and Federal Express began consciously investing time, money and
training to develop project management capabilities.
In this new
environment, project managers were seen to be more than mere implementers. They
were expected to act as business people and to have the wide range of
capabilities that enabled them to run a business. The project management
competencies they were required to master were broadened to include five
additional sets of capabilities:
· Risk management - recognition that all
projects face risk and that effective project management requires mastering
the risk management process (which includes risk identification, risk
quantification, risk response planning, and risk response control)
·
Quality management - a focus on carrying out projects in ways that lead to
maximum customer satisfaction
· Procurement management - understanding and
employing procurement and contracting skills (e.g., negotiation, understanding
risk implications of different contract structures, resolving disputes,
monitoring contractor behavior)
· Communication management - recognizing the
central role of communication in carrying out projects and developing the
skills needed to communicate more effectively with management, employees, and
customers
· Integration management - recognizing that mastery of the
individual competencies will not be helpful if project managers can integrate
them and make them work together
The new project management thus
incorporates a broader range of competencies than traditional management, and a
review of the added competencies shows that today's project manager must be an
effective business person. The total of nine competencies covered here represent
the knowledge-based competencies captured by the world's standard of project
management practice, A Guide to the Project Management Body of Knowledge
(PMBOK).
Some Driving Forces Leading to Changes in Perspectives on Project
Management
The new project management has emerged as a response to a
number of forces facing organizations in the 1980s and 1990s. Included here
are:
· Increases in competitive pressure - Today's business environment is
brutally competitive. To survive, organizations and individuals must produce
solutions to business problems faster, cheaper, better. Traditional "silo"
organizations are not nimble. They are bureaucratic and unable to respond to
customer demands quickly. Traditional approaches to project management are
also not effective because they tend to focus on only technical issues and
ignore business realities.
· Increases in the complexity of business and
products - A dramatic trait of today's world is that complexity is increasing
at a rapid rate. This means that work should be carried out by means of
cross-functional teams that have the range of knowledge and skills needed to
handle the complexity they encounter on their projects. Project management
employs precisely this type of approach to conducting work efforts.
Historically, projects have been carried out by means of cross-functional
teams.
· Globalization of business - As business becomes globalized, the
traditional functional organization structure appears inadequate to deal with
the new challenges that emerge. Even traditional project management is not up
to the task. For example, workers in a global company may find that their
headquarters is in Paris, their marketing department in Atlanta, their design
shop in San Diego, and their manufacturing facilities in Singapore. In such an
organization, work must often be carried out through virtual project teams that
communicate through teleconferences, videoconferences, e-mail, and the
Internet.
· Rapid change and shortened product life-cycles - The reality of
rapid change means that organizations must be lean (i.e., non-bureaucratic)
and flexible. The new project management enables them to be this
way.
The Reality of Project Failure
The move away from
traditional management was accelerated in the 1990s as it became apparent that
people and organizations were not doing a very good job in carrying out projects
using traditional ways. This reality was brought to the fore with the
publication of a research study by the Standish Group in 1994. The study
examined more than 8,400 information technology projects whose dollar value was
greater than $25 billion. Its findings were shocking. Of all the projects
studied, only 16 percent were clear-cut successes. That means that 84 percent
encountered some measure of failure! Of that 84 percent, 34 percent of the
examined projects were outright failures and 50 percent were in "recovery"
(i.e., their deficiencies were being fixed).
In 1997, Frame carried out a
study to validate the Standish Group findings. He asked 438 project managers to
describe their budget, specification, and schedule performance on their last
project. These managers came from a variety of industries including information
technology, telecommunications, pharmaceuticals, retailing, and construction.
Results of the study are found in tables 1, 2, and
3.
Table 1
Please describe the cost performance
you encountered on your last project
| Serious cost overrun |
17% |
| Modest cost overrun |
38% |
| On target |
27% |
| Modest cost underrun |
12% |
| Major cost saving |
6% |
Table 2
To what extent did you meet
the desired specifications on your last project?
| Fell short |
29% |
| Met the
specifications |
51% |
| Performed better than required |
20% |
Table 3
To what extent did you meet
your schedule target on your last project?
| Serious schedule slippage |
35% |
| Modest schedule slippage |
34% |
| On target |
22% |
| Modestly ahead of schedule |
8% |
| Dramatically ahead of schedule |
1% |
These tables roughly confirm the Standish Group study. They show that
for each of the three areas examined - costs, specifications, and schedules -
the projects examined encountered some measure of difficulty. Problems were
least significant in the area of specifications (see table 2): 71 percent of the
respondents reported that they either met or did better than the specifications
on their last project.
Problems were more significant in the cost
management area (table 1): 55 percent of the respondents reported having either
major or minor cost overruns on their projects.
Problems were most serious in
the schedule management area (table 3): here 69 percent of respondents reported
having either serious or modest schedule slippage. This result leads us to
conclude that these days time is the "killer constraint."
With project
failure rates as high as those suggested by the Standish Group and Frame
studies, it is obvious that organizations cannot afford to continue carrying out
their projects in the same old way. An internal study of project failure at
Morgan Stanley Dean Witter found that just a 1 percent improvement in project
performance could save the company an estimated $10 million per day! Clearly,
organizations must change the way they manage projects and adopt a new project
management approach.
The Project Office Solution
One approach organizations
have taken to adopting a new project management outlook is to create project
support offices. As their name suggests, these offices are configured to provide
organizations with the support they need to carry out projects effectively. The
services provided by such offices include:
· Administrative support - In
this case, the support office helps with administrative chores, such as
filling out time sheets and processing cost data
· Project management
consulting - Here, project management experts in the support office are made
available to help different groups deal with project problems on a case-by-case
basis
· Project management mentoring - This is an important way to get
senior managers up-to- speed on project management issues. In this case, the
project office may send a project management expert to help a senior manager
deal with project management issues, coaching the senior manager on good
practice.
· Establishing methods and standards - An effective project office
will develop methods and standards for good project management practice in the
organization. They develop templates to guide project management activities in
such areas as progress reports, change control, and issues logs.
·
Training - The project office can help the organization develop a project
management training curriculum and can identify vendors who provide pertinent
courses. Its experts can even conduct limited training efforts
themselves.
· Maintaining a cadre of project managers - Some project offices
maintain a cadre of project managers who can be assigned to run projects in
the organization.
The New Emphasis on Project Management Competence
It is
clear that an important way to improve project failure rates is to stress
project management competence. Competence can be viewed as operating at three
levels:
· Individual competence - Individuals engaged in project work must
be competent if projects are to be implemented effectively. This individual
competence is comprised of three parts:
o Knowledge-based competence.
E.g., Are team members familiar with basic scheduling, budgeting and
resource allocation techniques? Are the knowledgeable about good
contracting practice? (Note: One way to assess an individual's
knowledge-based competence is to have him/her sit for the Project
Management Institute's certification examination.)
o People skills.
E.g., Do team leaders have good empathy skills? Are they good
communicators? Can they motivate team members to do a good job?
o
Business sense. E.g., Are team leaders cost conscious? Do they know how to weigh
the benefits of a possible decision against its costs?
· Organizational
competence - It is not enough simply to have competent people assigned to
carry out project work. These people must be supported properly by their
organization, e.g., Do they have the tools they need? Cost data? Decent
working conditions? Organizational competence is commonly assessed using the
EISA approach, where E stands for assessments by players external to the
organization, I stands for assessments by players internal to the organization
but outside the team, and SA stands for self- assessment by the team
members.
· Team competence - Even competent people who are properly
supported by their organizations can fail on projects, if they do not work
together as a team. Teams operate competently when team members have a common
agreement about what performance objectives should be, when individuals agree
to subsume their personal desires to the interest of the overall team, and so
on.
Conclusion
Project management is substantially different
today from what it was a few years ago. In its early years, it was viewed
narrowly as an implementation effort to achieve defined technical goals. In this
environment, project managers were mere implementers of other people's
solutions. However, as the world experienced dramatic changes - in the
competitive environment, in technology, in complexity - it became clear that
project management would need to adjust itself to reflect the new realities.
This is where project management is today. Today, project management is business
management, and effective project managers are people with a good business
perspective on how work should be carried out in the
organization.
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