IMPORTANCE OF PROJECT

MANAGEMENT

Project Management was developed as a result of
serving and fulfilling a special need.

Due to rapid changes in business environment, now it
is no longer a special need management rather it has
become a standard way of doing business.

Increasing %age of firms efforts are now being
devoted to projects

Importance Of Project Mangement
Factors leading to the increased use of project
management:
Compression of the product life cycle
Knowledge explosion
Global Competition (planet, people, profit)
Corporate downsizing
Increased customer focus
Small projects represent big problems

Compression of the Product Life Cycle

Significant forces behind Demand for Project
management is the shortening of product life cycle.

World wide flows of information reduces the
competitive advantage of new products--- due to
being easily imitated or copied.

Computer Aided Designs (CAD) and CAM

E.g., in high tech industriesPLC is averaging 1.5 to 3
yearssome 30 years ago PLC of 10 to 15 years was
not uncommon.
Compression Of The Product Life Cycle
Keeping in view the shorter PLC
it is imperative to keep constant chain of new products in the
pipeline.

Place the product in the market before competitor.
Common rule of thumb in High tech product development is
that a 6 months delay can cause 33% loss in product revenue
share.

Time to market new products is indispensable
Due to the velocity with which technology is changing.

Speed is also becoming a competitive advantage
to get new products and services to the market as quickly as
possible.
Global Competition
Transformation from national to global economy has led
to dramatic technological changes or innovations.

Which created tremendous pressure on quality
improvement and cost containment.

Open market demands not only cheaper products but
also better products and services

Global Competition

Demand for better as well as low cost products :
led the businesses to get ISO 9000 certifications---a requirement
for doing business.

ISO 9000 certification is family of international standards for
quality management and assurance .

These standards cover design, procurement, quality assurance and
delivery process.

Increased pressure to reduce costs has forced business
organization to migrate their manufacturing plants to less
costly areas.

Knowledge Explosion
Growth and advancement in New Knowledge
Increased the complexity of projects due to latest
advances.
E.g., building a road 30 years ago was somewhat simple
process.

Today, the complexity in each area has
increased
Including materials, specifications, codes, aesthetic,
equipment and required specialists.

Knowledge Explosion
Basic project work has become more complex
requiring greater degree of coordination.

Existing products and services have also become
technologically complex:

In todays digital world, you will hardly find a
product that does not contain at least one micro-chip.

project complexity has increased the need to integrate
divergent technologies.

Corporate Downsizing

Focus in the past on growth and big is better--- organizations
began to realize that big is also more costly.

In the last decade or so, businesses have restructured
their organizational life or structure.

For the survival of firms, downsizing or rightsizing if
you are still employed, and sticking to core
competencies have become necessary.


Corporate Downsizing
Now, middle management has just become a skeleton of the
past.
Due to the fact that change is constant, Project management
has replaced the middle management as a way of ensuring that
things get done.
You will rarely or hardly find any major project performed
totally in house.
Companies outsource significant segments of project and
project managers have to manage not only their own people
but also their counterparts in different organizations.

Increased customer focus
Increased competition has placed a premium on
customer satisfaction.

Customer no longer simply settle for generic products
and services.

They want customized products and services that
cater to their specific needs.

This mandate requires a much closer working
relationship between provider and receiver.

Increased customer focus
Account executives and sales reps are assuming more
of Project manager role as they work with their
organization to satisfy the unique needs and requests
of clients.

This change has also prompted the development of
customized products and services.

Project management is critical both to development of
customized products and services and to sustain
lucrative relationship with customers.

Rapid development of third world
and Closed Economies.
The collapse of the soviet empire and gradual
opening of Asian communist countries have created

an expansion in built-up demand within these societies for
all manner of consumer goods and infrastructure
development.

Western firms are scrambling to introduce their
products and services to these new markets

Many firms are using project management techniques
to establish distribution channels and foreign bases of
operations.

Rapid development of third world
and Closed Economies.
Like wise, these historical changes have created a tremendous
market for core project work in the areas of heavy construction
and telecommunications as these countries strive to revitalize
their inefficient industries and decrepit infrastructures.

To reduce some of the risk and maximize individual talents,
more and more firms are entering into joint ventures with
indigenous firms to complete large and small scale foreign
projects.

These foreign ventures have placed a premium on the adaptive
capacity of project management personnel to work in foreign
cultures with vastly different values, work habits and
orientations.

Small projects represent big
problems

The velocity of change required to remain
competitive or simply keep up has created an
organizational climate in which hundreds of projects
are implemented concurrently.

This climate has created a multi project environment
and plethora of new problems.

Sharing and prioritizing resources across a portfolio
of projects is a major challenge for senior
management.

Small Projects Represent Big Problems

Those who manage small projects often face a variety of
problems than do managers of single mega projects.

Frequently, the organizational culture does not support small
projects and control system are non existent.

Thousands of product and service companies are faced with
multiple projects continuously in process.

Many firms have no idea of the problems involved with
inefficient management of small projects.

Small Projects Represent Big Problems
Small projects typically carry the same or more risk as do large
projects.

Small projects are perceived as having little impact on the
bottom line because they not demand large amounts of scarce
resources.

Because so many small projects are going concurrently and
because the perception of inefficiency impact is small,
measuring inefficiency is usually non-existent. Unfortunately
many small projects soon add up to large sums of money.

Many customers and millions of dollars are lost each year on
small projects in product and service organization.