R-pM Project Management, Manage the Enterprise and Projects as Businesses

By Harry Greene

Project management structures today concentrate on managing activities and performance

20th century project management has always attempted to manage people, tasks, and activities in the performance of a project. This is the cost side of the project. However, even with the attention to the cost side, there is no good method to manage costs. And the benefit side has never been managed.

The problems arise in investment analysis to justify and plan projects and management of capital development projects from three main sources:

  1. Failure to plan and manage the economic outputs or results to be produced by utilizing the developed capital to set up value creation
  2. Failure to define the capital being developed as specific solutions to be utilized in performance to produce economic outputs or results, to capture the cost of development, to set up specific capabilities to support and manage utilization of capital in operation, to develop solution documentation and knowledge for the proper utilization of the solution, and to amortize the cost of new capital solution utilization in operations
  3. Failure to organize and manage projects as a business to utilize assigned capital in performance to develop and implement new capital solutions as project results as a sub-business of an enterprise result in progress like “implemented capital solution” or “project in progress”

The failure to define results and performance solutions affects both the external management of the capital being developed by the project and the results that must increase in value to provide the return on solutions investments, as well as internal project management of capital solutions utilized in performance to produce project results.

Project management problems arise because we do not organize and manage the business

These problems arise because we do not organize and manage the business. The precise definition of the enterprise business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. If we are going to plan, organize, or develop a business, including a project, we must plan, organize, and develop the three components of the business:

  • Results: Specific economic outputs of value and quality produced at any level from business performance
  • Capital: Specific invested capital available as solutions to be utilized in business performance
  • Performance: Utilization of a specific solutions of worth to incur costs to produce specific results

The enterprise business must be organized and managed to plan investments and manage return on investments, and the project business must be organized and managed to develop and implement specific solutions for the enterprise business.

20th century capital development and project management structures manage the project to develop capital as tangible assets or a completed project, but do not manage the new results to be produced and the specific capital solutions needed to produce the results.

20th century project management methods complicate projects and do not manage the right entities

Projects cover both physical capital development, and capital development for management improvement in business change projects. Inevitably, there are problems in planning and managing the project to produce benefits, particularly for business change projects. 20th century project management structures concentrate on the cost side and ignore the benefit side. The structures manage and develop contrived entities like tasks, processes, activities, and events rather than the entities involved in development. Project benefits are contrived estimates of total increased sales, more revenues, lower costs, or some stated future outcomes that were to be there somehow at the end. Benefits are not itemized in detail the same that costs may be itemized, then built up in a controlled manner as the project proceeds, and then measured later as new solutions are utilized.

Business change project management concentrates on implementation for administrative users

20th century business change projects set up a team led by administrative staff, such as accounting or IT to concentrate on performance improvement and solution implementation. Top management often delegates their responsibility to an administration manager, who is to support the development, but is not an end-user of the development. There is the obligatory “steering committee” to dissapate responsibility. Management over the project rarely understands project substance and management often is by fiat through imposed deadlines, etc. Capital is being developed in the project, but nobody is charged with really understanding how the new capital is to be utilized to produce benefit. Usually the capital is to be utilized to do the same things that were done before the investment. It is difficult to justify major investment by potentially doing the same things better or faster.

Project objectives were solution implementation for operation rather than utilization for planned benefit

The some cases users are involved and interested, but their interest tends to be narrow to the part of the solution they would use. The objective is user performance improvement, which often generates resistance, rather than enabling users to produce specific new and improved results. The administrators involved are interested in how to operate or support the capital as a whole, and rarely are interested in the specific performance solutions embodied in the capital that must be utilized properly by the users to produce any benefit. Implementation concentrates on a major organization, process, or system and does not define the results to be improved or the specific capital solutions that must be utilized to produce the results.

Project management does not provide a framework to define project scope or content

Most projects have problems understanding what really is required from development. There is no organized business framework to precisely define the scope of the project. This produces changes in objectives mid-project and problems gaining acceptance from those who had to use the new development. Management over the project is often lacking or uncoordinated.

Take a look at capital development for management improvement or business change in your enterprise? Was there a scope that all agreed on? Were you ever really confident that everybody knew what they were doing? Did you ever have an itemized schedule of year by year benefits that were measured to ensure the returns? Were users enthusiastic at the end or just resigned to doing things differently?

Successful business change projects require extra skill and effort to overcome obstacles

If you had a successful business change project, it was not due to the methods used to plan and manage the project. It was due to the inherent benefits of the solution, and the capabilities of the team that produced success in spite of the obstacles. It is clear that there is a need to get away from the outdated 20th century approaches, in order to manage projects correctly.

Result-performance Management (R-pM) manages the components of the business and projects

The three components of all businesses 1) results produced, 2) capital invested, and 3) performance in the utilization of a capital solution to produce a result are organized by Result-performance Management (R-pM) for any company, project, or other business enterprise. With R-pM, the business, or any part of the business, can be viewed as a spreadsheet with results to be produced organized in columns across the top and the capital solutions to be utilized in rows down the side. Each cells with a solution deployed to produce a result is a performance domain to record performance costs and effectiveness.

A current enterprise business structure organizes the business and a strategic business structure plans the business results and capital solutions required at a strategic horizon. Any other entities used must be defined in terms of results produced, capital investments as solutions, and performance in solutions utilized to produce results.

<< Return to Article Directory               Learn more about R-pM             Continue to page 2 of 2 >>