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Popularity of Project Management: Macro-Considerations Many (inter-related) factors are responsible for the interest in projects and project management around the world. Globalization Economic Deregulation & Liberalization Information & Communication Technology Public-Private Partnerships Media Global Competition Civil Infrastructure Consumer Empowerment Elimination of Barriers to Trade & Investment Knowledge Explosion and the Compression of the Product Life-Cycle Integration of Financial Markets Global Awareness of Project Management
Globalization Globalization is a complex multidimension-al phenomena. In the last 50 years it has become an unstoppable force of vast mag-nitude which is profoundly affecting us all in our economic, financial, social, cultural, political, institutional, ecological, technolo-gical and other spheres. Typical manifestations of globalization are the elimination of barriers to trade in pro-duction inputs and finished goods and ser-vices, outsourcing, integration of financial markets and mobility of investment, mass diffusion of information and knowledge through modern communication techno-logy like the internet, creation of institu-tions and standards with global outreach, the emergence of English as world lan-guage, media-driven cultural exchanges, the growth of the tourism industry, mass migration, awareness of common problems and human rights and good governance.
Information and Communication Technology Information and Communication Techno-logy has revolutionalized our world. Colos-sal sums have been invested in this field over the past three decades by organiza-tions of all types, governments and by private individuals. The scope which the field of information and communication technology offers for projects is immense. Designing and develo-ping new ICT hardware – computer chips and systems and peripheral gadgets - is done through R+D projects for which pro-ject management is needed. Developing the software programmes which run on compu-ters is a typical (and often quite complex) project undertaking requiring knowledge of project management . Introducing new ICT infrastructure in organizations or overhaul-ing existing infrastructure is also project-based work and needs project management to be done professionally.
The Media The Media is a powerful force to be reckon-ed with. It brings the latest news to our doorsteps, entertains and scares us, and shapes our opinions in subtle and not so subtle ways about the way we view things in life. The media has helped spur the develop-ment of the enormous global tourism industry, causing a boom in investment in the requisite infrastructure and other pro-jects that go with it. The media generates awareness of, and interest in availing business, trade and investment opportunities across our globe, many of which can be pursued only through projects. In humanitarian crisis situations, extensive media coverage unleashes a flood of relief and rehabiliation projects aimed at mitiga-ting their negative impact.
Civil Infrastructure Infrastructure is the basis for a country‘s economic development. Roads and railway systems, air-, sea- and riverports transport goods, services and people between places, power generating plants supply the electricity that keeps factories, offices and homes running, and dams, in addition to supplying electricity, provide the water which is needed to irrigate crops and provide the food everyone needs in order to survive. Civil infrastructure projects can be very large and complex undertakings requiring vast sums of capital and taking years to complete. Without an effective means for handling such projects, the likelihood of their failing to meet their goal on time and budget to the satisfaction of all major stakeholders is high. Project management is indispensible for professionally mana-ging projects of this type.
Elimination of Barriers to Trade & Investment International trade and investment flows have witnessed phenomenal growth in recent decades. One of the prime driving forces is the significant reduction and, in some cases (as in the EU), complete elimi-nation of the barriers to trade (tariff and non-tariff barriers) in goods and services, and investment between states. Growth in trade and investment is usually accompanied by a growth in the number and diversity of related projects. Increasing the volume of trade in goods and services necessitates raising production capacity, investing in new production facilities at dif-ferent locations and developing the physi-cal, institutional and informational infra-structure needed to facilitate the trade. Investment flows between countries run in countless billions, much of which is utilized in projects to develop industries and set up offices and infrastructure.
Integration of Financial Markets Recent years have witnessed the emer-gence of an integrated and ICT-driven glo-bal financial market. Funds deposited in an institution in London can be transferred to an affiliate bank in Singapore at the click of a button and an investor in Sydney can pur-chase shares on the New York stock ex-change by calling his or her dealer to per-form the transaction. The integrated global financial market has implications for projects too. Funds can be channeled into projects virtually anywhere at short notice with a minumum of trans-action cost and procedural formality. Without access to the global financial mar-ket, many capital-intensive projects would be unable to generate the funds needed for their initiation, planning and implemention. The financial markets also offer innovative means to generate capital for projects.
Economic Liberalization & Deregulation With the collapse of the Soviet Union in the late 1980‘s and emergent interest across the globe in free market economics as a perceived means of advancing national economic development and generating wealth and social prosperity, and with the active encouragement of major interna-tional lending institutions, many countries in eastern Europe, Asia, the Middle East, Africa and Latin America adopted liberaliza-tion and deregulation programmes. The structurally diverse programmes, which have been implemented with varying degrees of success, included a package of financial, material and other incentives which made it considerably easier and attractive for both local businessmen and investors and foreigners to invest in lucrative projects on a large-scale in the manufacturing and service-sectors and in the infrastructure sector.
Public-Private Partnerships As countries liberalize and deregulate their economies, frameworks have evolved over the years to facilitate „partnerships“ between entities in the public and private sectors. Concerns over the high cost of undertaking some projects, in which traditionally the state was the project financer, implementor and owner, and interest in boosting the level of efficiency in the delivery of goods and services to the public by combining the resources, expertise and experience of enities from both sectors is also a factor which has encouraged public-private partnerships. Many countries now actively encourage public/ private-sector partnerships for several types of projects and have estab-lished the requisite institutional and regu-latory infrastructure.
Global Competition Competition is a defining feature of the global market economy. Through it, the range and standards of the goods and services we all desire are enhanced and improved. With the progressive libralization of trade regimes through the GATT/WTO, advances in logistics, outsourcing, integration of capital markets, enormous rise in invest-ment across borders, emergence of new economies as powerful actors in the global economic arena and the revolution in infor-mation and communication technology – among other important considerations - competition has surged drastically, in turn putting pressure to cut the cost of goods and services while at the same time upping pressure on quality standards. Manufactu-ring and service organizations rely on pro-jects to deal with competitive – and existen-tial - challenges they increasingly face.
Consumer Empowerment Years ago, consumers were content to accept the goods and services which were available in their markets without question. Product designing was done almost exclu-sively by the organizations which produced them – albeit taking into account feedback received from consumers. In recent years – and partly as a result of globalization - a transformation in the prod-ucer-consumer relationship has occured, resulting in the producers of goods and services having to give more consideration to the diverse wants and needs of their consumers than they did previously in order to survive and grow in increasingly competitive markets. Moreover, the trend towards „customization“ of products and services for consumers based on their culture and location in offers both challen-ges and opportunities for producers, in which projects can be of considerable use.
Knowledge Explosion and the Compression of the Product Life-Cycle We live in an exciting time where mankind‘s knowledge in virtually all scientific discipli-nes is increasing at an exponential rate. It is also highly mobile thanks in large mea-sure to the rapid evolution and spread of information and communication techno-logy. Knowledge finds it way into the design and level of sophistication of goods and ser-vices too. The increasingly rapid know-ledge infusion has resulted in goods (in particular in the consumer electronics field) attaining technological obscelence compa-ratively much faster then they did in the past. For producers, this means that they must respond quickly and innovatively in light of changing knowledge. Projects are an ex-cellent way of achieving this.
Global Awareness of Project Management Over the past half century the subject of project management has evolved into an enormous, diversified and specialized body of knowledge, much of which is derived from decades of continually and carefully observing and studying projects of varying size and complexity undertaken in different fields across the globe. Project management is now universally acknowledged as constituting an effective and efficient means of handling projects – that is, it offers projects a higher chance of achieving their goals in time and budget. Project Management is taught at the under-graduate and graduate level at universities, several associations have been established in different countries to advocate its use to government and the private/non-govern-mental sectors, and numerous books have been written on it.
Popularity of Project Management: Micro-Considerations Organizations operate in increasingly global, complex, dynamic and uncertain environments. The pressures on them to change and adapt are immense. Some factors causing them to pursue projects and apply project management methodologies to enable this change include: Maturization of Project Mgt. Methodologies Information and Communication Technology Effective and Efficient Allocation of Resources Organization’s Reputation Management by Projects Mandatory Requirement Innovation Challenge Customer Orientation Complexity Management Project Portfolio Management
Maturization of Project Mgt. Methodologies Project Management offers several „metho-dologies“ for professionally handling pro-jects. A methodology is an evolving and customizable knowledge framework of processes and tools tested on diverse and usually complex projects over time at diffe-rent places, and which helps the project to achieve its goal in the allocated time and budget (effectiveness and efficiency). The most popular methodology followed is the Project Management Institute‘s Project Management Body of Knowledge (PMBOK) which is based on nine knowledge areas and over 40 indvidual processes. Other renowned methodologies are PRINCE2, the APM Body of Knowledge and the IPMA Competence Baseline. A methodology is indispensible for projects but even if it is rigorously applied, it cannot guarantee project success.
Effective and Efficient Allocation of Resources One of the first topics a student of econo-mics or business administration encoun-ters is that of „resource scarcity“. No organization can afford to waste its resources – whether human, material, financial or otherwise. Through judicious use of its resources, organizations add value and develop an edge which enables them to survive and grow in a changing and at times often unpredictable environ-ment. Project Management offers organizations an excellent opportunity to effectively and efficiently utilize the (usually substantive) resources they apply to their portfolio of projects. It includes powerful tools for esti-mating cost and time, proactively managing risk, mobilizing human resources, dealing with stakeholders, monitoring, evaluating and controlling activities and so forth.
Management By Projects Organizations have undergone a significant structural and process transformation over the past few decades. More and more organizations are adopting „flatter manage-ment hierarchies“. As projects gain in importance for organizations – and con-stitute a sizeable chunk of their overall activities and resources- the interest in managing their projects in a professional and systematic manner has also increased as has interest in the infrastructure needed to support and sustain projects. At present, the different project manage-ment methodologies (e.g. PMBOK, PRINCE2, APMBOK) which evolved over time offer the only tested way for organiza-tions to properly manage their projects. Familiarity with one or more of these these project management methodologies (and project portfolio management) has become a necessity.
Innovation Challenge With the advent of globalization and conse-quent surge in competition in markets, organizations in the commercial sector in particular are coming under heavy pressure to innovate to retain and gain consumer interest as their product life-cycles de-crease. Typical examples of innovation-centred projects are New Product or Service Development. Project management is well placed to help organizations deal with the challenges of innovation. For example, it espouses the use of cross-functional and virtual teams, who are usually at the forefront of creating innovative solutions, and equips the teams with the processes and diverse tools which are needed to ensure that the desired inno-vation is being systematically pursued within the constraints of the pre-specified requirements, cost and budget.
Complexity Management Projects can be highly complex under-takings. The life-cycle of some projects – for example, those in infrastructure and the social sector - extends over several years and can cost billions. Time and cost apart, which themselves are sound reasons to adopt the most profes-sional approach which lends itself to mana-ging them, projects are often characterized by a very large number of inputs, factors and issues which all need to be identified, assessed, monitored and managed to ensure that their potential adverse impact on the project is minimized. Project Management offers a diverse col-lection of powerful processes and sophisti-cated tools which are designed to help pro-actively and effectively manage such com-plexities and steer the project in the direc-tion of its goal.
Information and Communication Technology Projects make extensive use of information and communication technology. The com-puters and laptops of today can store vast amounts of information in project data-bases in diverse formats (text, graphics, videos and audio files) at minimal cost . Project information can easily be edited and duplicated and, through internet, intranet and LAN networks, be transferred electronically at the click of a button bet-ween project locations. Videoconferencing and telecommunications have made project communication a simple matter. Many sophisticated project management softwares have been developed by ven-dors. Without these softwares, it would be very difficult (and costly as well as time-consuming) to generate work breakdown structures and project schedules, estimate project cost, and generate reports – to name a few of their diverse applications.
Organization’s Reputation Its common knowledge that whether for individuals or for organizaions, reputations are very difficult to make - and very easy to break. An organization‘s reputation can suffer dearly if perceptions arise inside and especially outside it that it cannot deliver promised innovations and is straying from its mission, goals and objectives. Project Management can help the organiza-tion in this regard. For example, by adopt-ing a project portolio management system, the organization can select only those pro-jects that are closely aligned with its mission, goals and objectives. Further-more, through the application of project management and its spectrum of proces-ses and sopisticated tools, the organization is assured a higher likelihood of „success“ for its projects which in turn would convey a more favourable image of itself to its stakeholders.
Mandatory Requirement Project Management is universally acknow-ledged as constituting the most profession-al way to manage projects and the approach which assures projects a higher likelihood of achieving their respective goals on time. Some project financers and owners con-tractually require that a specified project management methodology is followed on their projects in order to ensure that project resources are utilized by the project mana-ger and team effectively and efficiently. For some projects – for example, in infrastructure and social development, following a project management methodology is the only viable way to undertake the project .
Customer Orientation The „Customer is King“ – is a much-hyped phrase used by commercial organizations. In project management this phrase is the guiding force which drives the project towards its goal. In projects, the customer is a key stakehol-der who has a predefined role to play from the project‘s pre-initiation phase all the way to its closure and handover of its output/re-sult. Points of interaction between the pro-ject and its customer include (according to the PMBOK): determination of the project requirements and specifications through close consultation, mutual agreement on the project master plan, processing of project scope change requests from the customer, submission of project status and review reports to the customer, and verification by the customer that the project has met all contractual obligations.
Project Portfolio Management At any given point in time any private, public or non-governmental organization would have a large number of projects (which may be quite diverse in nature) in its portfolio. A large chunk of its resources would normally be tied up in this. To ensure that all projects in an organiza-tion‘s portfolio are fully consistent with its mission, goals, objectives,and strategy – and thus „add value“ to the organization – and also to ensure that the organization can provide the projects with all the re-sources they need, it is imperative that the organization has an effective system in place for identifying, assessing, priorit-izing, selecting and periodically monitoring its projects. Project Management offers a solution for this complex task through its specialized subject area „Portfolio Management“.