The 11 fundamentals of project management
Editor's note: Here is another valuable excerpt from the new success book by national business consultant Laurence B. Valant and partner Gayle W. Hustad, "Lead and Manage! The definitive guide for getting the results you want."
Over the years, we have worked with well known and highly respected companies which do a painstaking job of capital budgeting (summarizing all the projects that will require capital during the fiscal year), even calculating rates of return on the budgeted projects to four or more decimal places. And yet, in spite of their skill in the capital budgeting process, very few of these companies had effective project management systems or achieved the returns estimated so precisely.
Why? Just as leadership assumes people know how to lead and manage, they assume people know how to manage projects.
Out of more than 225 companies with which we have worked, less than what can be counted on one hand managed projects well. Most companies engage in numerous projects during any given year and most have no idea how much their projects cost, how well the money is being spent or how much was being achieved in returns.
Ironically, by applying basic fundamentals, project management is easy to do well. Let's discuss the fundamentals for successful project management and ways effective leaders and managers can get the projected returns on the projects they assign and the projects they manage.
Because companies have more projects than capital, they must have some rational and effective means of allocating that capital and assuring achievement of projected returns. Accordingly, companies invest in sophisticated capital budgeting systems where capital is typically allocated based on the projected returns; projects are rank ordered by the returns they will generate.
This is the first of many mistakes companies may make in their pursuit of effective project management. Companies allocate projects by projected returns, paying little attention to those who were the high performers in delivering on time, on budget project results.
One of our clients, an engineering consulting firm whose revenues are driven importantly by delivering projects on time and on budget, boasted of their star project managers, two gentlemen who were quick to brag about their performance. We encouraged this CEO to evaluate project performance using residual income analysis to determine who were in fact the best producers. The residual income analysis told the CEO a far different story; the great talkers' performances were in the bottom quartile of their sizeable project management staff.
The CEO called me to say, "I couldn't believe what looking at the project numbers revealed. We were dead wrong! Some of our best performers are those we least suspected, the heads down, say little project managers."
Most companies don't track performance accurately; therefore, companies don't know whose projects should be funded or who should manage the company's most important projects. Capital allocation for projects and the selection of project management should be based on carefully and fairly calculated project performance.
PROJECT MANAGEMENT FUNDAMENTALS
The ability to clarify expectations and to gain commitment to project completion is essential. The fundamentals of effective project management are:
1) Clearly defining the project prior to launch
2) Quantifying project objectives
3) Establishing only one Accountable Project Manager
4) Careful selection of project staff
5) Selecting an effective project management system
6) Specifying the project beginning and end dates
7) Establishing milestones/deliverables for each project objective
8) Ensuring weekly project monitoring and reporting
9) Tying weekly budget to major milestones
10) Project visibility to leadership
11) Ensuring weekly client contact
Next week: More about the fundamentals