Managing BY PROJECTS

By Lerouge, Cynthia | Strategic Finance, November 1999 | Go to article overview

Managing BY PROJECTS


Lerouge, Cynthia, Strategic Finance


THIS NEW WAY OF OPERATING LETS YOU TAILOR PRODUCTS AND SERVICES FOR INDIVIDUAL CUSTOMERS. AND THERE ARE NUMEROUS TOOLS AVAILABLE TO HELP YOU.

To be competitive, companies need to offer products and services made to order for each of their customers. Professional services firms - such as business consulting, architect construction, and engineering - have always provided customized solutions. But now information technology makes it possible for most industries to offer tailored solutions on a broad scale.

"Internal" customers also want individual solutions, especially when organizational teams are seeking to satisfy sophisticated intercompany needs. For example, many companies require dedicated solutions from internal information technology teams in addressing such issues as accounting requirements, Euro-currency issues, or multimedia staff training programs.

What makes a solution customized? Just about anything, including a unique collection of human resources organized as a project team, a bundle of different services that can range from development to installation to training, or the willingness to provide the service or good according to a customer-specified timetable.

Often the best strategy for providing such customized solutions is a project approach. Unlike traditional manufacturing processes or retained time services, projects are temporary and have defined budgets and time schedules. In fact, the Project Management Institute defines a project as: A temporary endeavor undertaken to create a unique product or service.

"Many professional firms simply do not view themselves as project based - so the entire concept of management by projects catches them off guard. However, once we are able to show them how a project system works, it quickly becomes clear that they actually are project-centric and this kind of approach to managing their business can help ensure they continue to operate very profitably," Matt Fogo, managing director of sales for the Midwest Region, Deltek Systems, Inc., says.

TAKING A STRATEGIC APPROACH

With so many professional service and high-tech industries becoming more project-centric to meet the demands of their external and internal customers, a new type of management is developing that aligns corporate goals with these project-based activities. It's called management by projects.

This isn't the same as project management. Managing by projects means financial professionals and other executives use a global perspective to strategize and analyze operations by looking at project information. This perspective arms them with the knowledge to make real-time adjustments to strategy when key indicators show a shift is necessary.

Artemis Management Systems offers a useful comparison shown in the sidebar above.

I'm sure that, as astute financial professionals, you're aware of the benefits your organization can derive from employing good management-by-projects techniques. Maximizing profitability often means looking beyond the categorization of costs and revenues provided by a financial statement and into the effectiveness and net profit associated with each project. Ultimately, profitability rests on the successful management and control of your company's collection of projects.

Your company especially can benefit when senior executives understand the strategic uses of management by projects. Here are some examples I compiled from interviews with industry executives who employ a management-by-projects philosophy in their organizations:

Strategic Marketing. With good project financial information, marketing executives can look across all projects to identify profitable types of clients/projects and aggressively target those for future business. Conversely, they can identify losers and avoid them.

Profit Planning. With accurate project data for past years, financial executives can build more accurate forecasts and budgets for future years. …

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