GAP ANALYSIS - Strategic Planning for Project Management

There are two primary reasons for wanting to perform strategic planning for project management. First and foremost is the desire to secure a competitive advantage. The second reason is to minimize the competition’s competitive advantage or to strengthen your own competitive advantage.

The key to reducing any disadvantage that may exist between you and your competitors is the process known as gap analysis. Figure below illustrates the basic concept behind gap analysis. You can compare your firm either to the industry average or to another company. Both comparisons are shown in Figure below.

Just for an example, using Figure below, we can compare the gaps in total sales. According to Figure below, the gap between your firm and your major competitor is significant and appears to be increasing. The gap between your organization and the industry average is also increasing, but not as greatly as the gap between you and your major competitor.

Gap analysis:

Gap analysis

For a company aspiring to perform strategic planning for project management, there are three critical gaps to analyze:

  • Speed to market
  • Competitiveness on cost
  • Competitiveness on quality

Figure below shows the gap on speed to market or new product development times. If the gap is large between you and either the industry average or your major competitor, then to win the battle you must develop a project management methodology that allows for the overlapping of life cycle phases combined with appreciable risk-taking. The larger the gap, the greater the risks to be taken. If the gap cannot be closed, then your organization must decide if its future should rest on the shoulders of a “first-to-market” approach or if a less critical “me-too” product approach is best. Another unfavorable result would be the firm’s inability to compete on full product lines. The latter could impact the firm’s revenue stream.

Another critical aspect of the schedule gap analysis shown in Figure below is customer’s future expectations. Consider, for example, the auto manufacturers and their tier one suppliers. Today, these organizations operate on a three-year life cycle from concept to first production run. If you were a tier one supplier, however, and you found out that your primary customers were experimenting with a 24-month car, then you would need to perform strategic planning, not only to be competitive but also to be able to react quickly should your customers mandate schedule compression.

Gap analysis (time):

Gap analysis (time):

A gap on cost is an even more serious situation. Figure below illustrates the cost or pricing gap. Strategic planning for project management can include for provisions in the methodology for better estimating techniques, the creation of lessons learned files on previous costing, and possibly the purchasing of historical databases for cost estimating.

Gap analysis (cost):

Gap analysis (cost):

Good project management methodologies allow work to be accomplished in less time, at lower cost, with fewer resources, and without any sacrifice in quality. But if a cost/pricing gap still persists despite good project management, then the organization may either have to be more selective about which projects it accepts or choose to compete on quality rather than on cost. The latter assumes that your customers would be willing to pay a higher price for added quality or added value features.

Gaps on time and cost may not necessarily limit the markets in which you compete. However, gaps on quality, as shown in Figure below, can severely hinder your firm’s ability to compete. The critical gap in Figure below is the difference between the customer’s expectations of quality and what you can deliver. Good project management methodologies can include policies, procedures, and guidelines for improving quality. However, the gap on quality takes a lot longer to compress than the gaps on time and cost.

Gap analysis (quality):

Gap analysis (quality):

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