Reasons Why Organisations Are Using Project Management to Achieve Their Strategic Objectives - Essay Example

REASONS WHY ORGANISATIONS ARE USING PROJECT MANAGEMENT TO ACHIEVE THEIR STRATEGIC OBJECTIVES By Contents Introduction……………………………………………………………………………….3 2. Strategic objectives……………………………………………………………………..3-4 3. Reasons for using project management to achieve strategic objectives………………………………………………………………………………..4-5 3.1 Increasing productivity………………………………………………………………….5-6 3.2 Keeping projects within their budget……………………………………………………6-7 3.3 Increasing communication………………………………………………………………...8 3.4 Facilitating monitoring of progress………………………………………………………..8 3.5 Facilitating risk management……………………………………………………………8-9 3.6 Improving product quality………………………………………………………………...9 3.7 Influencing decision-making…………………………………………………………..9-10 3.8 Enhancing client and customer satisfaction……………………………………………...10 4. Conclusion……………………………………………………………………………….10 5. Bibliography………………………………………………………………………….11-12 Reasons Why Organisations Are Using Project Management to Achieve Their Strategic Objectives 1. Introduction Any institution must make strategic objectives in order to have a competitive advantage. In the modern world where the business has become extremely complex, project management is an essential tool for achieving strategic objectives. Organisations will always have to start millions of projects that contribute to the overall profitability of the company and ensure that all strategic objectives are achieved. A project is a series of activities that are unique, sophisticated and connected which have one primary goal and purpose that must be completed within a specific timeframe, a specified budget and in the prescribed manner (Authority, 2014).. A project is characteristic of being an instrument of change, non-routine, unique, made up of interdependent activities, involves a degree of risk and has a start and an end (Authority, 2014). There is no guaranteed formula for successful projects. However, for a project to be successful, there must be efficient project management. Project management is the planning, monitoring and control of all phases of the project with all stakeholders and partakers of the project having the objective to complete it in time, at the specified cost, quality and at the required performance level (Authority, 2014). Activities involved in project management that contribute to the success of the project include having a comprehensive scope that is inclusive of the expected outcomes (Rosenau, & Githens, 2011). There should also be active management of risks, issues arising from the project and timely decision-making. Some of the project management techniques include PERT, Gantt Charts, and computerised project management tools. This essay discusses the reasons why project management is used to achieve strategic objectives. 2. Strategic Objectives Strategic objectives are simply the goals of a company that directs the entire organisation to success (Bowen, 2011). There are several categories of strategic objectives such as market standing that involves identifying the companys market position in the current and future market. Innovation is another objective in which the company lays down goals related to the development of new goods and services. Human resources involve recruiting and training employees in order to get tasks done (Bowen, 2011). Financial resources strategic objectives are those that ensure funding of the business and projects. Physical resources objectives involve acquiring building that facilitates production of goods and services. (Bowen, 2011) Productivity goals are those that ensure that resources are used efficiently in the creation of goods and services. Social responsibility goals are those that provide that a company shows care for its surrounding community. Profit requirements strategic objectives determine the required amount of money the company must make in order to be profitable (Bowen, 2011). These strategic objectives ought to meet requirements such as being specific, measurable, appropriate, realistic and time-oriented (Bowen, 2011). Typically, every company project targets meeting the company’s strategic objectives. Most useful projects focus on meeting only one strategic objective at a time. If a project focuses on too many strategic objectives, it may become completely disoriented. 3. Reasons For Using Project Management To Achieve Strategic Objectives Project management is used to achieve these goals mainly because it increases productivity. The fact that it keeps projects on a budget helps to manage the companys financial resources. It also increases the level of communication an organisation that is essential to increasing the chances of achieving the strategic objectives of the company (McDonough, 2009). The continuous monitoring of the status of targets and deliverables by project management is crucial for the attainment of strategic objectives. For the strategic objectives to be achieved, risk has to be managed and controlled effectively. Project management does all this. Project management also ensures that the products are of improved quality. Other reasons why project management is used to realize strategic objectives are that it streamlines decision-making and keep all clients and customers satisfied. It ensures setting goals, planning for the achievement of these goals and setting actions to achieve these goals. Through project management, therefore, the company can, therefore, achieve most if not all its strategic objectives (McDonough, 2009). 3.1 Increasing Productivity Project management ensures that the productivity of the company and its employees towards the project is as high as it can be. This is done through proper planning and through the use of effective project management models that help the project manager set deadlines for the completion of the project. Deadlines are essential to the accomplishment of set targets. There are five processes involved in the project life cycle. These include initiating, planning, executing, monitoring and closing. Time management and meeting of deadlines are crucial when ensuring productivity. Allocation of time and scheduling can be done through Program Evaluation Research Task (PERT) and the Critical Path Method (CPM) (Kwak, & Ibbs, 2002). These methods are network-based techniques that involve drawing of network diagrams in order to determine the critical path. The critical path is the path that the project can be carried out from the start to the end in order to take the shortest time possible. Through these methods, the processes that take the shortest time can be selected. Crashing can also be done in order to achieve productivity through reduction of time without failing to meet the deadlines of the project. Maximum productivity can also be achieved through the integration of the six sigma technique and the project management model. The six sigma model involves defining project needs, measuring the task performance, analysing the cause of task failure, improvements and control and maintenance of the improvements made (Vijay, 2012). The initiation stage of the project can be integrated with defining of project needs the process where the initiator of a project comes up with a proposal that clearly identifies the needs of the project. This involves capturing the needs of the customer and identifying the critical success factors of the project. The planning stage can go with the measuring of task performance. This involves decisions on how work should be conducted in order to eliminate bottlenecks and achieve the project’s objectives. The PERT and CPM methods are used to schedule the project (Aliyu, 2013). A six sigma tool that could be used in this stage is the Failure Mode Effect Analysis (FMEA). Its role is to establish project priorities therefore preventing spending too much time on non-critical activities. The execution stage, when combined with the analysing of root causes of task failure stage of six sigma, can help to identify the most productive tasks and concentrate on them. This can be done by using a cause and effect diagram or using the five whys in order to identify problems and solve them. The monitoring can be very effective in ensuring productivity when combined with the improvements stage in that the unproductive tasks can be improved. The termination and closing phase is connected with the control stage to maintain the improvements made after the project is completed (Vijay, 2012). 3.2 Keeping Projects Within Their Budget Budgeting and accurate estimations are done through project management. During the planning phase, the budgets are estimated, and the resources allocated. Cost management is very crucial in project management as it prevents cost overruns during the project cycle. It involves resource planning, cost estimating, cost budgeting and control, earned value analysis, depreciation and capital budgeting (Kwak, & Ibbs, 2002). Resource planning involves allocating resources for each task. Resource types are identified, and the information converted into network schedules and Gantt charts (figure 1). This helps to allocate resources for all durations. Cost estimating involves approximating costs involved in the entire project. Care is taken not to underestimate costs so as to avoid project refinancing. Cost budgeting involves budgeting of all costs during the entire project life. The earned value analysis measures the projects value at given points in time to predict its completion time and costs. Depreciation is the structured reduction of the cost of the project. Capital budgeting involves selecting those long-term investments that generate cash over long periods of time (Burger and Hawkesworth, 2013). Figure 1 Gantt Chart Sourced from (Baars, Harmsen, Kramer, Sesink, & van Zundert, 2006). 3.3 Increasing Communication Efficient project plans are inclusive of strategic communication plans. Communication is essential for strategic objectives to be met. The fact that project management enhances excellent communication is reason enough for it to be used to achieve strategic objectives. Efficient communication involves distributing the project plan, updating all stakeholders of the project on its status, issuing reviews, reviewing the health of the project and identifying risks (McDonough, 2009). All stakeholders should also know when to expect communication of information. Project meetings and using “scrum” facilitate airing of issues on the project and also ensure everyone is updated on the status of the project (McDonough, 2009). 3.4 Facilitating Monitoring Of Progress Monitoring is a core phase of the project life cycle. Through using Gantt charts, time tracking, meetings and other task management methods monitoring is made possible. Project monitoring is also made possible through the use of status reports. After a project is executed, monitoring is crucial so as to ensure everything goes as planned. Monitoring software could be used in order to identify any potential hitches that could make the project fail. The project manager is monitors things such as the actual start and finish dates of the project management, the actual and estimated costs, resource allocation and workloads and the progress on deliverables. 3.5 Facilitating Risk Management Risk management is the practice in which risks are noted, evaluated and mitigated using the best methods. Prince2 model provides a disciplined environment for implementation of responses on the basis of identifying and assessing risks (Tomanek, & Juricek, 2015). Risk assessments are done at the beginning of projects by project managers. The risks are defined and predicted. Appropriate measures are then taken to alleviate them using a risk management plans. Risks are avoided, lessened or accepted and then combated (Scheid, 2011). The risk management plans what exactly to do with the risks should they be encountered. 3.6 Improving Product Quality New projects are commonly undertaken in order to increase customer satisfaction by improving the quality of existing products. The six sigma is a method often used in order to measure the levels of customer-client satisfaction. It seeks to eliminate customer defects and increase customer satisfaction. It involves defining goals, measuring the key factors to achieve these objectives, analysing data to ensure it meets the objectives, optimising the design of the product and verifying the design (Antony, & Banuelas, 2002). Scrum method is also used to ensure a quality software release. It involves the compilation and prioritisation of tasks from the backlog and the sprint. Product quality is also improved through project management by constant improvements on goals. 3.7 Influences Quality Decision-Making Project management involves the use of efficient decision-making techniques. They include Pareto analysis in which probable changes are ranked, and the change in the highest ranking effected (Gundlach, 2013). Decision trees involve drawing a tree diagram containing the desired changes. An example is where a manager wonders whether to improve the existing product or do away with it completely. A decision tree with the two choices as branches is constructed. Consequences from the branches are shown, and careful analysis then done in order to make decisions. Cost-benefit analysis involves making decisions based on the cost and benefit of a decision. It is represented in the form of a chart (Gundlach, 2013). The decision that is most beneficial is selected. SWOT analysis is also used where decisions are made based on the strengths, weaknesses, opportunities and threats of the company. 3.8 Enhancing Client And Customer Satisfaction Methods used in project management such as Scrum, six sigma, and the agile model are mainly customer focused and are keen to ensuring that products are suitable for customers (Bowen, 2011). The methods provide tailoring of products to fit customer needs. Stakeholder analysis is done during the planning phase where the needs of customers and clients are identified. This analysis acts as a guideline for whom to contact and work with and why (Bowen, 2011). 4. Conclusion In summary, project management is essential to achieving the organisations strategic objectives in the complex business environment present in the modern world. It is through project management that productivity is increased, budgets formulated, progress monitored, product quality improved, decisions made, and customers satisfied. All these are most companies strategic objectives. Project management is, therefore, a very significant process of any organisation. Efficient project management could, therefore, be said to be a key to attaining a competitive edge. Word count (1987) 5. Bibliography Aliyu, A., 2013. Project Management using Critical Path Method (CPM): A Pragmatic Study. Global Journal of Pure and Applied Sciences, 18(3-4). Antony, J., & Banuelas, R., 2002. Key ingredients for the effective implementation of Six Sigma program. Measuring Business Excellence, 6(4), 20-27. Authority, S. Q., 2014. PDA in Project Management at SCQF level 8. Baars, W., Harmsen, H., Kramer, R., Sesink, L., & van Zundert, J., 2006. Project management handbook. Version 1.1-July 2006. Bowen, R., 2011. Project Management Helps Meet Strategic Objectives. Available at: http://www.brighthubpm.com/monitoring-projects/16173-relating-project-management-and-strategic-objectives/ [Accessed 7 May 2015]. Bowen, R., 2011. Project Management Satisfies Clients and Customers. Available at: http://www.brighthubpm.com/monitoring-projects/16786-project-management-satisfies-clients-and-customers/ [Accessed 7 May 2015]. Burger, P. and Hawkesworth, I., 2013. Capital budgeting and procurement practices. OECD Journal on Budgeting, 13(1), pp.57-104. Gundlach, M., 2013. Project Management Techniques That Facilitate Decision-Making Processes. Available at: http://www.brighthubpm.com/project-planning/16233-project-management-streamlines-decision-making/ [Accessed 7 May 2015]. Kwak, Y. H., & Ibbs, C. W., 2002. Project management process maturity (PM) 2 model. Journal of management in Engineering, 18(3), 150-155. McDonough, M., 2009. Project Management Increases Communication. Available at: http://www.brighthubpm.com/monitoring-projects/16604-project-management-increases-communication/ [Accessed 7 May 2015]. McDonough, M., 2009. Project Management Monitors Progress towards Specified Outcomes. Available at: http://www.brighthubpm.com/monitoring-projects/16714-monitoring-progress-towards-specified-outcomes/ [Accessed 7 May 2015]. Rosenau, M. D., & Githens, G. D., 2011. Successful Project Management: A Step-by-Step Approach with Practical Examples: A Step-by-Step Approach with Practical Examples. John Wiley & Sons. Scheid, J., 2011. Project Mangement Decreases Risk. Available at: http://www.brighthubpm.com/risk-management/16874-project-mangement-decreases-risk/ [Accessed 7 May 2015]. Tomanek, M., & Juricek, J., 2015. Project Risk Management Model Based on PRINCE2 and Scrum Frameworks. arXiv preprint arXiv:1502.03595. Vijay, S. M., 2012. INTEGRATION OF SIX SIGMA WITH PROJECT MANAGEMENT. International Journal of Advanced Engineering Technology, EISSN 0976, 3945, 29-32. Read More