In a company, there are many coexisting functional areas that make business work properly: management, finances, administration, production/operations, quality, marketing, human resources, project management, process, logistics. In order to reach its organizational objectives, it is vital that all these areas have the same purpose and business strategy.
Next, we are going to delve into the Project Management area: what is it, which are its main functions, its biggest challenges, etc.
Definition of the project management area
Project management can be defined as the group of actions and methodologies that are applied to plan, organize, motivate and control resources and processes that the company has. It is focused on accompanying the evolution of projects, solving possible problems in an effective way and following tasks up until they are finished and delivered.
Having said this, we have to define what a project is. We could say that a project is every business activity that requires a particular organization, and that has specific goals, with the aim of achieving a result and that it has a predefined beginning and an end. This will be accomplished in the delivery of a product, service or result to the customer. A hard-working project management area is in charge of accompanying the rest of the areas to obtain a beneficial result not just in terms of costs but also in terms of final results, focusing on getting an excellent customer experience. Next, we will delve into this topic, its evolution, phases, responsibilities and importance for a company.
A short history of its beginning and development over time
It is important to mention, before talking about project management evolution, that its origin goes back to the big projects that had an impact on the course of history. This way, before 1900, in a primitive economic, commercial and feudal model, technical masters and engineers were focused on acquiring knowledge empirically and intuitively, in a way. With the arrival of Neoliberalism, new models were born, such as the Taylor's management theory (1900) and the Gantt charts (1910) which talked about the analysis of cost and benefit. When Keynesian Economics emerged, the first PERT work models also emerged: their approach pointed towards project preparation and evolution. Finally, with Neoliberalism, business management per se arose, accompanied by sophisticated methodologies such as PRINCE2 or P.M.I recommendations.
It is considered a new discipline since its peak was in the 20th century and its beginning are marked by the appearance of complex projects and the interrelationship between them.
Old project follow-up systems were based on trial and error or just estimations devoided of scientific rigour. Then, new needs arose as a result of complex and heterogenous processes so it became vital to use technological tools and systems devoted to the organization and accompaniment of these projects.
People such as Henry Gantt (1861-1919), later called the father of planning and control techniques, who was the developer of the well-known Gantt chart, and Henri Fayol (1841-1925) who studied the five project management functions, have been the responsible for redesigning the way in which the completion and follow-up of a project is understood at present. In the 1950s, through the publication of several papers, Hans Lang was the person who started to synchronize project management models with the technologies of that time in order to get efficient costs management and maximize benefits.
The first computers with tools that helped accelerate processes and avoid human errors have been key in the development of project management. This area found its inflection point in history in 1969 when the Project Management Institute was created in the USA (known as P.M.I) which held its first symposium with 83 people; it evolved and in 1987, the Project Management Book of Knowledge (PMBOK) was published and became the standard to follow in project management. On the other hand, in Europe, almost at the same time, the International Project Management Association (IPMA) was created, trying to obtain the same results as its American competitor: developing a more dynamic, always-evolving approach for project management.
Phases of Project management
As was stated before, the Project Management Institute was founded at the end of the 1970s and it changed everything with its Body of Knowledge: here we can find the "Five phases of project management" which became the basic and "traditional" standard on which every thorough management process should be based. This way, the following strategic diagram was drawn:
- Feasibility study: It is the first phase, previous to taking action. Its main goal is to establish the goals the company wants to achieve and the feasibility to achieve them, the costs and benefits, both economically and strategically, and the way in which the process will be carried out.
At present, several different software tools are used for management that establish risks, costs and the possibility of delivery of a high-quality product by analyzing methodologies and goals.
- Planning: This is a very important phase because here you define the necessary resources, costs and efforts. In this phase, the action plan (in general, it is accompanied by a document that details the planning), the division of tasks, the areas and way of working are defined and the scope of the project is determined.
- Execution: It is the most important phase since the previously mentioned tasks are carried out at this point. It is usually accompanied by different reports where you inform the completed tasks, the problems you found and the obtained results.
It materializes all the ideas by using the techniques and processes previously defined.
- Monitoring: At this point, the analysts or directors of the project take on importance because they learn the obtained results of every task performed and then, they can reach a conclusion from the information provided. This is why, they can analyze making changes and corrections to the strategy used in order to deliver a high-quality product or service to the customer.
- Closing: Also known as the assessment phase. Here you can assess whether the planning was followed or not according to the document that supports it. It is accompanied by a comparison between the expectations and the results to assess the errors and flaws of the project so that, in the future, you can make better decisions for future tasks.
Through the analysis of the checklist (verification list), you can carry out the formal closing of the tasks of every area. You will be able to assess if the obtained results are in accordance with (or not) the development of the planned strategy.
Main benefits of the area
Having an area especialized in project management, together with excellent computer services, adds great value to a company that wants to be relevant in these present times. When you maximize the reaction ability of the employees, you can spend less money and obtain greater added value in terms of the quality of the product.
The benefits of this area can be summarized in its help to solve problems more quickly and efficiently, in a collaborative way through the creation and delegation of tasks to people trained to carry them out. At the same time, work times will be reduced and focused on specific tasks, adding more quality to the product or service that is being developed. Employees will work in a more interactive and interconnected way with real-time information, which will lead to a better customer experience. Costs can be lowered by creating budgets in advance and through adequate planning; you can also accomplish communication fluency between the areas which will prevent the appearance of the well-known "bottlenecks" and "critical paths". Moreover, by a correct resource management, you can gather very important information for future projects of the company.
We also have to acknowledge that the P.M.I., in a paper called “The high cost of low performance”, assured that the application of correct project management tools gave advantage on the materialization of projects of a 71% of success rate with respect to the initial goals; in contrast, the companies that still did not have a project management area, could materialize their projects with a 52% of success.
Main responsibilities of the area within the company
When a project is carried out, in general, the goal is to achieve the delivery of a product or service that is both functional for the customer as well as original and which meets a need. This need should be clear and specific and the planning must be done to satisfy it. So, we can say that among the responsibilities of this area, the director will be in charge of defining the methodology they are going to use and the phases of the project; he/she will work on the budget, resources and human efforts. On the other hand, he/she will define the scope of the project, its goal and its approximate or estimated duration so that when he/she carries out the monitoring and closing of the project, it can be assessed the obtained information to check if the used strategy was useful, if the people in charged worked properly and if the proposed planning was followed.
On the other hand, one of the main tasks of the director of the area is to achieve that employees carry out tasks in a harmonious, communicative and synchronized way. The management of conflicts, negotiation and cooperation must be part of the qualities of the person in charge of the project management area, also known as Project Manager.
It is also important to mention that the Project Manager has to understand how people work to look for the most efficient and dynamic ways to apply it to their work. Standarization of processes contributes to a better development of tasks. This way, for the customer (and the market), a company that has planned the project beforehand, that has carried it out accordingly to the plan, that has overcome obstacles dynamically and by working in teams, and, especially, that has accomplished the goals of the project on time and according to the estimated budget, gives a clear message to the competition and, of course, it will bring great value to the company or a raise in sales.
At the same time, it is suggested that the area uses up-to-date accounting systems so that they can process data quickly, faithfully and effectively. It is also very important to carry out batch processing so that work does not rely on particular bills or receipts. Moreover, a system must be created to combine and centralize all documents to be processed together just once, in order for you to save time and effort. The use of process metrics will allow you to compare the company's previous and current activity and establish a reference point on which your team can rely. Some of the metrics you can use are accounting relationships, cycle time, number of documents in process, etc.
We also suggest that accountants deliver balance sheet reports regularly so that you have a more accurate perspective of the economic functioning of the company and can make adequate predictions.
Finally, it is advisable for owners of small and middle enterprises to separate personal accounts from the company's accounts; this means that the person in charge should have an external account to have better control over income and expenditure. At the same time, the manager should set a fixed salary and maintain that amount so that the accounts do not lose balance.
Importance of project management
It is important to mention here that the correct management of projects gives companies meticulousness and the ability to produce an experience and learning flow, which turns into scientific rigor, in a way. A modern standardization process involves using different technological tools such as specific software of organizational and commercial management. With these tools, you can guarantee to lower the involuntary human errors which leads to greater success possibilities when developing a project.
We should also say that project management provides leadership to projects which will lead to a better final product. The leader is in charge of controlling quality, making sure that a product is delivered according to the particular needs and that it was developed according to previous realistic planning.
Different methodologies in the project management area
With the development of different software tools and with a constant evolution in the area, we can talk about the existence of different methodologies in the project management area. The following methodologies are the most "popular" within the current commercial traffic. Some of these methodologies adapt better to smaller and focalized projects while others are better for big challenges by providing very useful tools to the people in charge of the project. We can find:
- AGILE: It is characterized by great flexibility. It allows you to process projects in several small cycles. In general, it is better for dynamic projects, subject to constant changes and regular revisions. The Project Manager will divide the project into "sprints" that will have to adapt constantly to the new requirements of customers. By using AGILE methodology, you provide great adaptability to your work team but subject to a regular iteration.
- Adaptative Project Framework:
It was created to provide a solution to projects that are sensitive to suffer modifications and changes throughout their development; this approach focuses on adapting the process to the needs that may arise. It is presented as the counterpart of the traditional or linear approach where each task has a previous and a following one.
- Kanban: Kanban method is based on the correct use of time, project dimension, and estimate costs; it deletes "sprints" to focus on the idea of continuous delivery. Visual symbols are used to keep the team alert about the quantity or quality of the desired products (Kanban means "signal"). It became popular in the 1940s in the Japanese Toyota factory. It is usually combined with Scrum methodology to get a better result.
- Extreme Programing: Based on the agile structure, Extreme Programing, known as XP, was developed in the 90s as a short-cycle work method; its main goal is to deliver a high-quality product and to achieve excellent customer service. It is focused on small tasks, accompanied by specific software to assure high-quality products.
- PERT: The Project Evaluation Review Technique was designed specifically for manufacturing industries. With this methodology, you get a better development because it takes into account the necessary time to develop a task in such a way that the result is according to the defined time and budget.
- Waterfall: Created to provide a solution to projects that had many changes and approaches, this methodology focuses on adapting the process to new needs and requirements that may arise. Waterfall methodology is a traditional and conservative approach and it is usually used in construction sectors where every step depends on a previous one and conditions the following one, that is to say that it is subject to abrupt or untimely changes. Tasks will be carried out in a linear and and string-like way, from beginning to end.
- PRINCE2: Projects in Controlled Environments methodology has become popular in places such as the UK. It is a flexible and agile methodology to work with. Its focus is on the time of delivery of products as well as in the money needed according to the established budget. There is a clear division of tasks for each worker so there are no misunderstandings (in theory) as regards who should do each task, which guarantees a successful final result.
- Scrum: With this methodology, you may overcome obstacles more quickly than with the waterfall methodology. It is also based on the AGILE structure and is focused on the interactive collaboration of all the participants of the project. The leader of the project will take the name of Scrum Master and will divide the "sprints" according to the time limits, such as in one, two or three weeks. It is very popular because this methodology provides efficiency and competitiveness to the company, making the most of the work time and resulting in an iterative and successful process.
It is worth mentioning that these different methodologies are not the only ones or the "best" ones for a company but they can be ramified, combined or applied in such a way that they can be able to adapt to the way of working of a company and vice versa.
That is why we recommend you that when you have to choose a methodology, you analyze several factors such as:
- proposed goals,
- the type of project according to its magnitude and size,
- the way employees work,
- types of customers and their expectations,
- the goals of the organization,
- work structure (remote or in-office),
- every factor you think is important to assess when you believe it is time to change the way you work.
Having introduced this area, it is important to say that each company has its own goals and customers with particular needs; however, you should not neglect the commercial development of your company in order to keep or raise its competitiveness. This is only possible if companies optimize their functioning and improve the value proposition for their customers as a result of adequate project management based on the strategic goals of the organization.
The advantages of having adequate project management include producing convincing results, having real-time information and work times in accordance with previous planning, as well as established tasks.