General Business Management versus Project Business Management
Two key aspects of general business management are operations management and project management. Operations business management includes the various aspects of strategic planning, tactical planning, objectives development, and those operational portfolios, programs, and projects that are managed by one or more internal business units that are performed using routine operational processes. True project work is very different in many areas compared to operational work.
Project management is used to perform projects using project management processes and normally involves multiple business units and can require external resources. Many existing PMO's are typically concerned only with the planning and management of the non-operational portfolios, programs, and projects. However, the planning and management of projects cannot be done on a standalone basis, but rather it must be integrated with the business management aspects of the enterprise.
Projects need to be an integral part of the enterprise's business in order to effectively accomplish the enterprise's strategic direction and business objectives. Hence, a clear understanding of what is and is not a project; what projects are operations specific; what is required to satisfactorily complete a project, and how to combine projects into programs and portfolios is essential. In turn, the enterprise's ability to successfully manage projects depends on the proper application of specific project management processes, knowledge, skills, tools, and techniques. Finally, the proper application of these aspects of project management will have a significant impact on time to market, cost to market, and quality to market of the enterprise's projects.
The principles, concepts, and processes of project-related portfolio management, program management, and project management need to be blended with the principles, concepts, and varied processes of general business management that relate to a project. This provides the basis for establishing the concept of a Project Business Management Office. Figure 2 illustrates how operational business management and project business management processes and practices are related and need to be integrated to effectively manage an overall enterprise.
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- Integrates & harmonizes management concepts, processes, and practices contained in PMI's Standards for Project, Program and Portfolio Management with those of Business Management
- Integrates Strategic and Tactical Planning of Operational Objectives with Non-Operational Objectives
- Applies and manages resources in direct alignment with strategic initiatives, and business objectives
- Model is adjustable to various enterprise sizes
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Figure 2: A Three-Dimensional View of Project Business Management
The graphic shows how, for some enterprises, about two-thirds of available funding is distributed for operational work while about one-third goes to non-operational work. This statistic leads one to draw the conclusion that many processes, procedures and management methods have been developed and deployed by most enterprises for the operational side of the business, while the non-operational work side has been neglected. But the non-operational work is the thing that can shape the future business and financial success of the enterprise.
Consequently, the products and services delivered by non-operational work are not given the level of strategic planning and tactical execution required to increase the bottom line. A related issue facing many organizations is the significant number of project failures resulting from poor planning, lack of requirements definition, and lack of adequate resources to name a few. The factors that cause project failures are largely the result of inadequate strategic and tactical planning processes.
Project business management and the PBM methodology are a unique approach and structured solution to managing the project-related business of an enterprise. The set of processes and the steps within each PBM process can be adjusted and modified to suit the business size of the enterprise employing the PBM methodology. The purpose of the PBM methodology is to implement project management to serve the enterprise's strategic business initiatives and business objectives and to harness the enterprise's existing project management capabilities.
The outputs of the processes contained in the PBM methodology flow down from strategies, to objectives, to portfolios, to programs, and to projects. This hierarchically integrated set of processes is used to produce the required deliverables and to assure the values and benefits desired by the enterprise can be attained. Knowing what specific actions are required and how to proceed after executive management gives the go-ahead is a key objective of the PBM methodology.
PMOs are currently employed in only a few enterprises as a successful business function at the executive level. However, we believe this practice will become a standard practice of future enterprise organizational models. Executives and business unit managers in today's most forward-thinking enterprises are already taking project management disciplines beyond handling specific projects in manufacturing, product development, services, and information technology, and adopting its powerful methods enterprise-wide. Employing project management enterprise-wide is applicable to any type of enterprise, whether it is a for-profit company, a non-profit company, or a governmental agency. Therefore, the PBMO organization structure proposed in this paper is aimed at existing enterprises with established business operations and defined functional organizations who desire to effectively achieve there strategic business objectives.
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Introduction
