BUS605: Strategic Project Management

1a. Examine how projects achieve an organization's strategic objectives

• What is a strategic objective?
• What are tangible and intangible benefits?
• How can intangible benefits align with organizational objectives?
• How can projects help an organization achieve a competitive advantage?

Organizations define strategic objectives as a way to stay focused on what is important and achieve the overall goals of the organization. Projects are one way in which an organization can achieve its objectives. However, projects can be expensive endeavors. Therefore, it is critical that projects align with strategic objectives to ensure that the projects stay focused on the most important concerns.

Organizations are concerned with both tangible and intangible benefits. For example, improving a manufacturing process and reducing waste are good examples of Six Sigma types of projects which yield specific, measurable results, often in terms of monetary results. However, there are intangible benefits from projects that are not easy to measure, yet important to the overall health of the organization. Projects that improve public opinion or employee satisfaction fall into this category.

Finally, projects can help an organization achieve a competitive advantage in the marketplace. Projects that seek to do things better, cheaper, and faster can often help the organization be first to market or offer a cheaper, better-quality alternative.

Review strategy in The Role of Strategy in Management.

 

1b. Distinguish between projects and on-going operations when presented with various scenarios

• What are the characteristics that make up a project?
• How are projects different from on-going operations?
• Identify what happens when a project moves into the operational phase.

Projects have different characteristics from on-going operations. Projects are unique endeavors with the intention of creating a new product, good, or service. A project may seek to solve a problem or improve a process. Projects have specific beginning and ending dates. On-going operations are the normal work of the organization. For example, an organization that produces widgets may have assembly processes that run to create the widgets. These processes are repeatable rather than unique. One way in which to compare projects with on-going operations might be to consider the widget scenario. Making widgets through the assembly process is an on-going operation. However, developing a better process that helps the organization make widgets faster would be a project.

Projects often deliver results that become operational. For example, a project that develops a more efficient way of building widgets would then be operationalized as part of the new on-going process for making widgets. Project results often lead to improved manufacturing, business process improvement, or other such improvements that become part of the organization's day-to-day activities.

 

1c. Explain the role of organizational leadership in finding project opportunities and overcoming organizational challenges related to projects

• What is the difference between management and leadership?
• Identify several techniques for selecting projects.
• What is Net Present Value?

Project sponsors are often key leaders within the organization that are focused on strategic objectives. Project sponsors initiate projects and provide funding. Project sponsors work with project managers to draft the project charter, the document that authorizes a project. However, it's important that projects have the support of leadership in providing motivation and vision. Leaders can help projects overcome objections from stakeholders, both inside and outside of the organization.

Organizational leaders are also focused on the strategic objectives of the organization and, therefore, are more likely to align projects to business goals and objectives. Leaders see the "big picture" and are, therefore, more likely to seek support from others on the leadership team. Organizational support can be important in clearly obstacles that may present themselves during project planning and execution.

There are several tools with which to provide financial justification for a project. Most of these tools are discussed in more detail in Unit 2 and Unit 3. However, an important financial tool is the net present value. Net present value analyzes the cost of a project against its anticipated benefits over time. For example, if a project is expected to cost $125,000 over one year but return a savings of $60,000 for the first year and 45,000 for the next three years with a discount rate of 12%, the net present value can be calculated as follows:

Discount rate 12%
	Year 1	Year 2	Year 3	Year 4	Total
Income	$60,000	$45,000	$45,000	$45,000	$195,000
Costs	$125,000	$-	$-	$-	$125,000
Cash Flow	$(65,000)	$45,000	$45,000	$45,000	$70,000
				NPV	$38,466

To review, see What is Project Management? and Project Selection.

 

1d. Demonstrate best practices that contribute to a project's success or failure

• What are several common reasons for project failure?
• How can good project management help projects succeed?

Projects have a high rate of failure. Often project failure is related to projects that exceed the planned budget or schedule. However, projects can fail because they don't meet the expectations of stakeholders or experience a devastating risk that was unplanned. It's important to recognize the characteristics that can lead to project failure and know the best practices for avoiding such a fate.

Projects that suffer from budget problems often do so because of an increase in the scope of work without an increase in the budget needed to perform the work. Adequate change control procedures can help enforce project boundaries and minimize unexpected increases in scope.

Schedule problems can result from a variety of problems. Some may include the lack of resources that are needed for the project when they are needed. Human resources may not be available at the right time. Vendors may fail to deliver raw materials when needed.

Follow-up and follow-through are two ways in which a project manager can stay on top of potential problem areas within the project. A risk management plan with both mitigation and contingency plans can also help.

Procurement is another area where projects can incur problems. Vendors can be unreliable, fail to deliver on time, or fail to meet the quality needed. The vendor selection process should include verification of references. Having backup vendors is another way in which the project team can prepare for unreliable vendors.

To review, read Reasons Projects Succeed or Fail.

 

1e. Demonstrate how the triple constraint – scope, schedule, and budget – interplay within a project

• What is the triple constraint, and why is it important?
• What happens when one part of the triple constraint is impacted?
• How can a project manager manage changes to the triple constraint?

The triple constraint includes project scope, schedule, and budget.

Scope: This includes the work to be completed during the project. The scope can include the deliverables from that work, meaning the tangible elements produced as a result of the work of the project. Equally as important as the work to be performed is the work that will not be performed during the project. Defining what will not be done helps provide boundaries for the project that avoids unnecessary work or "scope creep".

Schedule: Project work is broken into tasks and work packages needed to complete the project deliverables. Determining how long these tasks will take and sequencing them into a logical order of events is needed to develop a project schedule.

Cost/Budget: Determining the resources needed to complete project tasks and then assigning costs to each resource is how we develop the project budget.

A fourth element, quality, has been suggested as an important element in the project constraints. Each element of the triple constraint feeds quality. For example, if the schedule is compressed, it can affect the quality of the final deliverable. Therefore, the project manager often spends the majority of the time balancing scope, schedule, and budget. In fact, project reporting focuses heavily on reporting the status of the triple constraint.

The project manager must keep an eye on the triple constraint at all times. There are techniques that can help the project manager maintain focus. One way is by using a project priority matrix.

To review, watch Understanding The Project Management Triangle (or Triple Constraint).

 

Unit 1 Vocabulary

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• Agile project management
• best practices
• framework
• integration
• interpersonal skills
• knowledge areas
• net present value
• operations
• process groups
• project characteristics
• project lifecycle
• Project Management Office
• strategy
• triple constraint