WALL STREET BENEFITS - Strategic Planning for Project Management

The benefits recognized by the present views of project management are now seen to be strategic initiatives designed to enhance shareholder value. Perhaps one of the best examples showing this is the effect on stock price illustrated in Figure below. An executive who wishes to remain anonymous believes that the difference between the target selling price of his company’s stock and the actual selling price can be attributed to the quality of the comapny’s project management system and management’s ability to execute projects within time, cost, and quality constraints and to the customer’s satisfaction. If the actual selling price was below the target selling price, it might indicate that the company, especially if it were project-driven, was having fundamental problems with project execution, which would affect competitiveness and profitability.

Impact on stock price as a result of better project management:

It may take years for a company just beginning to adopt project management to reap the benefits shown in Figure below. Some of the organizations that believe they are achieving the benefits of Figure below are in these fields:

• Automotive subcontractors, some of whom are now treated as “partners” by their customers due to the quality of their project management systems.
• Financial institutions, especially those that are aggressively acquiring and assimilating other organizations and rapidly integrating both cultures into one without any appreciable negative effect on earnings.
• High technology companies who have beaten their competitors to the marketplace with new products.

Not all companies have the ability to reap the benefits of project management. Some do not yet recognize the benefits of or need for strategic planning for project management. Others recognize its importance but simply lack expertise in how to do it. In either event, strategic planning for project management is a necessity.