The point of Project Management
TPM: traditional project management
PPA: profitably performing asset
Constraint trifecta (budget-schedule-quality)
M&M: Mechanics and mechanisms
The project is a development process. In previous articles, the question “when is a project completed” was raised, and answered differently, according to the project type. The “spend project” ends when the budget is spent and the asset is in hand. This is also the implied definition advocated by traditional project management, for capital projects. The end point for an “investment project” is different, in the investment-centric project management approach, which puts the proper end point when the asset has been proven profitably performing. This simple distinction carries huge implications to the project delivery philosophy. Whereas the latter will be focused on spending control in a TPM approach, the PPA approach focuses instead on the maximization of future investment returns. This is what was meant in Chapter 1 by the statement that all project activities, concerns, objectives, decisions and financial priorities must be resolved in favor of making the asset profitably performing. The project is the investment vehicle to develop the asset. Accordingly, project development is defined as the sum of the works and activities required to realize the profitably performing asset.
In this context, development unfolds over time in two sequential stages: conceptualization and realization. The conceptualization stage encompasses all the activities leading to a theoretical definition of the asset, from which construction can take place. The realization stage begins with construction planning, continues with construction and ends with the verification of the commercial performance of the operating asset (done during the initial period of revenue generation activities). The realization stage ends with the feedback process by which all the assumptions, predictions, estimates and performance assessment metrics6 are validated with operational data.
Invariably, aiming for the cheapest asset at the end of conceptualization stage will cost most during the realization state, and yield lowest operating profits thereafter. The choice is between cheapest now and richest later. The two are mutually exclusive.
What is project management? In ICPM, project management is defined this way:
Project management is the controlled development of the project.
Notice the absence of references to the tools, techniques and resources to get the project done and satisfy stakeholders. Project management is investment-centric rather than procedural; it is asset focused, not technique driven. In ICPM, project management is simultaneously an organization, a business, and a relationship nexus.
Project management is an organization. As an organization, project management mirrors the TPM definition. The organization owns the mechanics and mechanisms (M&M) to develop the asset. These M&Ms are essential to the execution of the work. But they are not the end-all, be-all of the organization. They are but one subset among a host of others that include:
- the marshaling of resources to do the work;
- the training & development of the personnel in parallel to the work done;
- the firm imposition of uniformity across the organization in the matter of rules and procedures;
- the close monitoring the evolution and the metrics derived from it;
- the constant vigilance towards in-execution improvements and innovation; and
- team building; owner nurturing.
The project management organization is akin to the field general tasked to march the troops across the landscape to secure the target. Planning is critical. The responsibility falls upon the organization to develop the prescriptive plans that will define, sequence, quantify, allocate, validate, verify and measure the work to be undertaken. The work is complemented by the core skills and knowledge of the organization, through its people and its corporate parent. The organization has a duty to marshal the requisite expertise and staff up the project team, in such a way that it will be valunomic (discussed in a previous posting).
Project management is a business. Projects are not carried out in a vacuum but constrained by contracts, budgets, schedules, regulations and expectations. Every single link in the supply chain must be profitable to minimize the risk of failure to the project. The business character relates to the commercial aspects of the work. The first obligation of this business is to develop, implement and enforce an execution framework within which the organization works. It sets the foundation underlying how the work will be done and establishes the hierarchy for decision-making.
The second obligation rests with the contract. The work must carry on in accordance with the contract. The latter must be clear on its terms, conditions, requirements and obligations. The business must adhere unconditionally to its full extent, and must adopt the contract as basis of interactions with the parties signatory to it. One has leeway to inject informality and personality into those interactions; but contractual primacy must have hegemony in fine.
The third and final obligation is tied to money. The business must get paid for the work done by its team, and pay for the work of others in a timely manner. The business must put in place the processes and systems to gather and track the metrics against which invoices and payments will be made. Finally, in addition to getting paid for the work by its team, the business must do that work profitably. The profit motive pushes the business to continuously explore ways to improve process efficiencies, execution efficacy, and labor productivity. It must strive to acquire intellectual property (IP) assets which can propitiate the business’ future endeavor.
Project management is a relationship nexus. Project management is about people. People are led; everything else is managed. Ultimately, it is people who make or break a project. They will be required to interact with complex computer systems to track, measure, quantify and assess project metrics, and infer decisions thereafter. The inevitability of software yields an encouraging paradox: it is people who ultimately dictate the faith of a project, not machines. People execute projects (not companies or organizations). Even in a workplace already dominated by computers, the human variable remains at the heart of the practice of project management. This argument is superbly demonstrated by Geoff Colvin’s “Humans are underrated”, by which he makes a convincing case for the future of employment against the backdrop of technology advances. Project management is a human endeavor powered by machines. The key is in finding ways to integrate the two.
Further insights can be gleaned from chapter 2 of Investment-Centric Project Management, available on Amazon.com.