WHAT IS STRATEGIC PLANNING FOR PROJECT MANAGEMENT? - Strategic Planning for Project Management

Strategic planning for project management is the development of a standard methodology for project management, a methodology that can be used over and over again, and that will produce a high likelihood of achieving the project’s objectives. Although strategic planning for the methodology and execution of the methodology does not guarantee profits or success, it does improve the chances of success.

One primary advantage of developing an implementation methodology is that it provides the organization with a consistency of action. As the number of interrelated functional units in organizations has increased, so have the benefits from the integrating direction afforded by the project management implementation process.

Methodologies need not be complex. Figure below shows the “skeleton” for the development of a simple project management methodology. The methodology begins with a project definition process, which is broken down into a technical baseline, a functional or management baseline, and a financial baseline. The technical baseline includes, at a minimum:

  • Statement of work (SOW).
  • Specifications.
  • Work breakdown structure (WBS).
  • Timing (i.e., schedules).
  • Spending curve (S curve).

The functional or management baseline indicates how you will manage the technical baseline. This includes:

  • Resumés of the key players.
  • Project policies and procedures.
  • The organization for the project.
  • Responsibility assignment matrices (RAMs).

Methodology structuring:

Methodology structuring

The financial baseline identifies how costs will be collected and analyzed, how variances will be explained, and how reports will be prepared. Altogether, this is a simple process that can be applied to each and every project.

Without this repetitive process, subunits tend to drift off in their own direction without regard to their role as a subsystem in a larger system of goals and objectives.

The objective-setting and the integration of the implementation process using the methodology assure that all of the parts of an organization are moving toward the same common objective. The methodology gives direction to diverse activities, as well as providing a common process for managing multinational projects.

Another advantage of strategic project planning is that it provides a vehicle for the communication of overall goals to all levels of management in the organization. It affords the potential of a vertical feedback loop from top to bottom, bottom to top, and functional unit to functional unit. The process of communication and its resultant understanding helps reduce resistance to change. It is extremely difficult to achieve commitment to change when employees do not understand its purpose. The strategic project planning process gives all levels an opportunity to participate, thus reducing the fear of the unknown and possibly eliminating resistance.

The final and perhaps the most important advantage is the thinking process required. Planning is a rational, logically ordered function. This is what a structured methodology provides. Many managers caught up in the day-to-day action of operations will appreciate the order afforded by a logical thinking process. Methodologies can be based upon sound, logical decisions. Figure below shows the logical decision-making process that could be part of the project selection process for an organization. Checklists can be developed for each section of Figure below to simplify the process.

The first box in Figure below is the project definition process. At this point, the project definition process simply involves a clear understanding of the objectives, which should be defined in both business and technical terms.

The second box is an analysis of the environmental situation. This includes a market feasibility analysis to determine:

  • The potential size of the market for the product.
  • The potential risks on product liability.
  • The capital requirements for the product.
  • The market position on price.
  • The expected competitive response.
  • The regulatory climate, if applicable.
  • The degree of social acceptance.
  • Human factors (e.g., unionization).

Project selection process:

Project selection process

The third box in Figure above is an analysis of the competitive situation and includes:

  • The overall competitive advantage of the product
  • Opportunities for technical superiority:
    1. Product performance
    2. Patent protection
    3. Exceptional price-quality-value relationship
  • Business attractiveness:
    1. Type and nature of competitors
    2. Structure of the competition/industry
    3. Differences among competitors (price, quality, etc.)
    4. Threat of substitute products
  • Competitive positioning:
    1. Market share
    2. Rate of change in market share
    3. Perceived differentiation among competitors and across various market segments
    4. Positioning of the product within the product line
  • Opportunities for market positioning:
    1. Franchises
    2. Reputation/image
    3. Superior service
  • Supply chain management:
    1. Ownership of raw material sources
    2. Vertical integration
  • Physical plant opportunities:
    1. Locations
    2. Superior logistics support
  • Financial capabilities:
    1. Available capital
    2. Credit rating impact
    3. Wall Street support
  • Efficient operations management:
    1. Inventory management
    2. Production
    3. Distribution
    4. Logistics support

The next box in Figure above is resources and capabilities. Analysis of resources and capabilities, combined with the analysis of competitive positioning just discussed, allows us to determine our strengths and weaknesses. Identifying opportunities and threats lets us identify what we want to do. However, it is knowing our strengths and weaknesses that lets us identify what we can do. Therefore, the design of any type of project management methodology must be based heavily upon what the organization can do.

Internal strengths and weaknesses can be defined for each major functional area. The design of a project management methodology can exploit the strengths in each functional area and minimize its weaknesses. Not all functional areas will possess the same strengths and weaknesses.

The following illustrates typical strengths or weaknesses for various functional organizations:

  • Research and development:
    1. Ability to conduct basic/applied research
    2. Ability to maintain state-of-the-art knowledge
    3. Technical forecasting ability
    4. Well-equipped laboratories
    5. Proprietary technical knowledge
    6. An innovative and creative environment
    7. Offensive R&D capability
    8. Defensive R&D capability
    9. Ability to optimize cost with performance
  • Manufacturing:
    1. Efficiency factors
    2. Raw material availability and cost
    3. Vertical integration abilities
    4. Quality assurance system
    5. Relationship with unions
    6. Learning curve applications
    7. Subsystems integration
  • Finance and accounting:
    1. Cash flow (present and future projections)
    2. Forward pricing rates
    3. Working capital requirements
  • Human resource management:
    1. Turnover rate of key personnel
    2. Recruitment opportunities
    3. Promotion opportunities
    4. Having a project management career path
    5. Quality of management at all levels
    6. Public relations policies
    7. Social consciousness
  • Marketing:
    1. Price-value analysis
    2. Sales forecasting ability
    3. Market share
    4. Life cycle phases of each product
    5. Brand loyalty
    6. Patent protection
    7. Turnover of key personnel

Having analyzed what we can do, we must now look at past performance to see if there are any applicable lessons learned files that could impact the current project or selection of projects. Analysis of past performance, as shown in Figure above, is usually the best guide for the specifications of the present project.

The final box in Figure above is the decision on whether or not to undertake the project. This type of decision-making process is critical if we are to improve our chances of success. Historically, less than 10 percent of R&D projects ever make it through full commercialization where all costs are recovered. Part of that problem has been the lack of a structured approach for decision-making, project approval, and project execution. All this can be satisfied with a sound project management methodology.

In the absence of an explicit project management methodology, decisions are made incrementally. A response to the crisis of the moment may result in a choice that is unrelated to, and perhaps inconsistent with, the choice made in the previous moment of crisis. Discontinuous choices serve to keep the organization from moving forward. Contradictory choices are a disservice to the organization and may well be the cause of its demise. Such discontinuous and contradictory choices occur when decisions are made independently to achieve different objectives, even though everyone is supposedly working on the same project. When the implementation process is made explicit, however, objectives, missions, and policies become visible guidelines that produce logically consistent decisions.

Small companies usually have an easier time in performing strategic planning for project management excellence. Large companies with highly diversified product lines and multiple management styles find that institutionalizing changes in the way projects are managed can be very complex. Innovation and creativity in project management can be a daunting, but not impossible, task.

Effective strategic planning for project management is a never-ending effort, requiring continuous support. The two most common continuous supporting strategies are the integration opportunities strategy, outlined in Figure below, and the performance improvement strategy, shown in Figure below.

Figure below outlines the opportunities that exist to integrate or combine an existing methodology with other types of management approaches that may be currently in use within the company. Such other methodologies available for integration include concurrent engineering, total quality management (TQM), scope change management, and risk management. Integrated strategies provide a synergistic effect. Typical synergies include.

Project Management Process

  • Tighter cost control: This results from a uniform cost reporting system in which variance reporting can be tightened and lessons learned files are maintained and updated.
  • Corporate resource models: Companies are now able to develop total company resource models and capacity planning models to determine how efficiently the existing resources are being utilized and how much new business can be undertaken.
  • Efficiency/effectiveness: A good methodology allows for the capturing and comparison of metrics to show that the organization is performing

Integration opportunities between process strategies:

Integration opportunities between process strategies

Qualitative process improvement opportunities:

Qualitative process improvement opportunities

more work in less time and with fewer resources. Such data verifies the existence of economies of scale.

Concurrent Engineering Process

  • Parts scheduling: Improvement can be made in the way that parts are ordered and tracked. As an organization overlaps activities to compress the schedule, timely delivery of materials is crucial.
  • Risk identification: Overlapping activities increase the risks on a project. Better risk management practices are essential.
  • Resource constraint analysis: Overlapping activities during concurrent engineering require that sufficient resources be available. Models are available to define the resource constraints and recommend ways to deal with limited availability of resources.
  • Supplier involvement: Overlapping activities not only increase your risks but can also increase the risks for your supplier. A good methodology allows for better customer interfacing.

Total Quality Management (TQM)

  • Lower cost of quality: Many of the basic principles of project management are also the basic principles of TQM. A good project management methodology will allow for the maximization of benefits for both.
  • Customer involvement: A good methodology allows you to get closer to your customers. This could easily result in customer involvement in ways to improve quality for both products and services.
  • Supplier involvement: A good methodology allows you to get closer to your supplier base. Suppliers will often come up with ideas to improve quality, thus solidifying your relationship with them. They also may have information from other companies they supply, possibly even your competitors, and may be willing to release this information.

Scope Change Management

  • Impact analysis: A good methodology allows for checklists and forms for accurately determining the time, cost, and quality impact resulting from scope changes. It also puts in place a regimented process for scope change management.
  • Customer management: Customers want to believe that all changes are no-cost changes (to the customer), and that the changes can be made at any time and in any life cycle phase. A good methodology that completely outlines the change management process allows for better customer management.
  • Enhancement projects: A good project management methodology allows for a clear distinction as to whether the change should be made now or possibly later as an enhancement project. It addresses the question of how imperative the change actually is.

Risk Management

  • WBS analysis: A good methodology provides guidelines on how deep into the WBS risk analysis should be performed.
  • Technical risk analysis: Risk analysis is reasonably well defined for schedule and cost risks. Very little is known about technical risk management.A good methodology may provide templates on how to perform technical risk management.
  • Customer involvement: Your firm’s perception of risks, specifically which risks are worth taking and which are not, may be significantly different than your customer’s perceptions. Customer involvement in risk analysis is essential.

The qualitative process improvement strategy shown in Figure above is designed to improve the efficiency of the existing methodology and to find new applications for it. The integrated process strategies of Figure above are one part of these process improvement strategies, as shown.

The macroenvironment of business:

macroenvironment of business

Note:Stakeholders are identified in the “immediate environment” circle.

The goal of most organizations is to be more profitable than their competitors.
Project management methodologies contribute to profitability through more efficient execution of the project and implementation of the methodology. This is another valid reason mandating continuous strategic planning.

A good project management methodology will be responsive to all environmental factors and will serve all of its stakeholders. Stakeholders are people who have a vested interest in the company’s performance and who have claims on its performance. Figure above shows, as part of the immediate environment, six commonly used categories of stakeholder: suppliers, customers, employees, creditors, shareholders, and even competitors. Some organizations would also identify government officials and society at large as being among their multiple stakeholders.

One part of strategic planning for project management may include prioritizing the order in which stakeholders will be satisfied if and when a problem exists. A good project management methodology may also include a “standard practices” section, which will discuss moral and ethical considerations involved in dealing with stakeholders.

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