F. John Reh wrote about business management for The Balance, and has 30 years of experience as a business manager.
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Updated October 31, 2019
Project management is one of the most critical components of a successful business. It affects revenues and liabilities, and it ultimately interacts with customer or client satisfaction and retention. Your company might have only one project in the works at a time, while other larger corporations and entities might juggle several projects at once. By their very nature, projects are temporary.
Projects are a means toward a goal, and the goal will eventually be reached. Your business might move on to another project…or not. It might have been a one-time objective.
Projects prompt a burgeoning need in the workforce. The Project Management Institute estimated that, during the 2010–2020 period, more than 15 million new project management positions would be added worldwide.
Project management is not the entire operation of your company. It’s just one segment, a specified project with a detailed plan as to how you and your business are going to achieve that goal. It’s a plan detailed in a series of steps, each of them as important as the others. You must achieve one to properly move on to the next.
Think of project management as a ladder you must climb. You can’t leap to the top. You must take it rung by rung for utmost efficiency. Your team must apply the tools made available to them as well as their expertise and knowledge to execute each step and move on to the next.
It’s easy enough to say you want to get to Box A, so you’re going to take 25 steps in that direction. But you must also factor time considerations into your project plan, and you most likely have to work within a budget. You might crawl those 25 steps or you might jog. It depends on how quickly you must get there for the successful completion of the project. You can save money by traveling on foot, or you can hire a driver. It depends on the budget you’ve dedicated to the project.
There is no one-size-fits-all approach, system, or plan. Each project you and your company tackle will most likely have its timeline, goal, and budget. That’s why it’s so critical to have a savvy, talented project manager in place to run the show.
A successful project manager must simultaneously manage four basic elements of a project. These elements are interrelated.
- Scope: This involves the project’s size, goals, and requirements.
- Resources: You’ll need people, equipment, and materials in place.
- Time: This doesn’t just address how much time the project will take overall. It must be broken down into task durations, dependencies, and critical path.
- Money: Have a firm grasp on costs, contingencies, and profit.
The project scope is the definition of what the project is supposed to accomplish and the budgets of time and money that have been created to achieve these objectives. Any change to the scope of the project must have a matching change in budget, time, resources, or all three.
If the project scope is to construct a building to house three widgets on a budget of $100,000, the project manager is expected to do that. If the scope is changed to a building for four widgets, the project manager must obtain an appropriate change in time, money, and resources.
There are three aspects of understanding and managing resources: people, equipment, and material.
A successful project manager must effectively manage the resources assigned to the project, including members of the project team, vendor staff, and subcontractors. He must ensure that his employees have the skills and tools they need to complete the job, and he must continually monitor whether he has enough people in place to complete the project on deadline. His job is to ensure that each person understands the task and project deadlines.
The senior member of each group of employees reports to the project manager when he’s managing direct employees, but employees might also have a line manager who provides technical direction. In a matrix management situation like a project team, the project manager’s job is to provide project direction to the line managers. Managing labor subcontracts usually means managing the team lead for the subcontracted workers, who in turn manage those workers.
A project manager must often procure equipment and materials and manage their use as well so that the team can operate efficiently. He’s responsible for having the appropriate equipment and materials in the correct location at the proper time.
The three elements of successful time management are tasks, schedule, and critical path.
Build the project schedule by listing, in order, all the tasks that must be completed. Some must be done sequentially while others can overlap or be done in tandem. Assign a duration to each task. Allocate the required resources. Determine predecessors—what tasks must be completed before others—and successors, the tasks that can’t start until after each other task is completed. This aspect of project management is sometimes referred to as waterfall management because one task follows another in more or less sequential order.
Project management software can simplify the task of creating and managing the project schedule.
Some tasks have a little flexibility in their required start and finish dates. This is called “float.” Other tasks have no flexibility. They have zero float. A line through all the tasks with zero float is called the critical path. All tasks on this path—and there can be multiple, parallel paths—must be completed on time if the project is to come in by its deadline. The project manager’s key time management task is monitoring the critical path.
The three considerations in managing money are costs, contingencies, and profit.
Each task has a cost, whether that’s the labor hours of a computer programmer or the purchase price of a cubic yard of concrete. Each of these costs is estimated and totaled when preparing the project budget.
Some estimates will be more accurate than others. The project budget should, therefore, include a contingency allowance—money set aside in the budget “just in case” the actual cost of an item is wildly different from the estimate.
Profit is the money the company wants to make from the task. It’s put on top of the cost.
So a project budget is composed of the estimated cost, plus the contingency, plus any profit. The project manager’s job is to keep the actual cost at or below the estimated cost and to maximize the profit the company earns on the project.
Successful project management takes practice. These ideas can give you a basic understanding of project management but consider it only a beginning. If your job or career path includes project management, and if you want to improve your skills, talk to successful project managers, read, and practice. Project management can be a very rewarding career.