From management of projects to management by projects

In the last couple of weeks, I have been talking to several executives from corporations who are seeking our advice because they are running up against (sometimes invisible) ceilings with the traditional management of projects and are puzzled as to how they can improve the situation.

Many of these companies have seen a massive increase in the number and importance of projects in recent years and the proven approach to project management no longer works. This is because it is primarily focused on execution. The sales department handles the business, negotiates the contract and the project manager only comes into play after that. He or she is now responsible for realizing the specified objectives within the framework of tight deadlines and cost specifications.

The separation between the business functions of marketing, product management and sales, the realization functions of project management as well as development and the operational functions of production, logistics and maintenance is increasingly dysfunctional, as it creates an artificial division of related value-added functions. Ultimately, the aim is to achieve integrated and end-to-end control of the corporate functions involved in the form of projects, from the customer’s requirements to the delivery of the result to the customer. However, the company’s organizational structure, which is divided into specialized functions and departments, makes this difficult. The distribution of power, i.e. the allocation of budgets and resources, also prevents this. It is therefore primarily internal reasons that stand in the way of integrated and consistent control.

How can these hurdles be overcome? By top management admitting that the business is increasingly project-oriented and that this has consequences for the entire organization. In addition to a strategic orientation of the company in the sense of “management by projects”, the entrepreneurial planning and control of the entire business on the basis of one or more project portfolios and the consistent design of organizational processes and structures. In addition, the project or program manager should also be strengthened as the person responsible for the “project business” with extensive decision-making powers and an image as an “entrepreneur”, as well as the promotion of a project-friendly culture. In future, previously dominant specialist departments will have to “subordinate” themselves, i.e. they will no longer be the main driver of events, but internal suppliers of know-how and resources.

But what does this mean for the project manager? This person needs competences that go far beyond the methods of project management and above all comprise entrepreneurial and generalist competences and are geared towards the integration of all those involved.

But above all it means for the company to initiate a change process that gives priority to projects, that places entrepreneurial action in the form of projects at the centre of its activities and makes everything else subordinate to it. It is therefore above all a matter of organisational restructuring that removes internal hurdles to project work and gives “free way” to value-adding processes with the associated responsibilities. Certainly not every manager in the company will like this, as they will have to relinquish power and subordinate themselves. But in the sense of a sustainable and agile business orientation of the company this needs to be accepted.

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Author: Reinhard Wagner, CEO of Tiba Managementberatung

 

 

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