Thursday, July 24, 2008

Is Adding Value the Correct Question to Ask about Project Management?

The Project Management Institute (PMI) is trying to prove that project management adds value. Their proof will come as a stunning surprise to no one. Project management is the expense of implementing a project, not the value. If the project is worthwhile, the project is worth the expense. At its best, good project management will minimize the expense.

Why Does Someone Start a Project?
People don't usually start projects for the joy of doing the project, they do it because they want the value that the project adds. For example, someone wants a bridge over the river, so they go through the process of planning and constructing the bridge. Does the construction add value? No, its the bridge that adds value, the construction is the expense of having the bridge.

When someone decides to implement an ERP system, they are not doing it for the pleasure of examining their processes, changing them and implementing them through some new piece of software. They do it because they want to plan their enterprise resources. The project management and the project are the expense of doing that.

What is the Correct Question?
Someone may ask if there is enough value in the bridge or in having their resources planned? These are excellent questions, which in many cases should be closely scrutinized before beginning a project. However, once the decision has been made to execute the project, project management is the expense of executing the project.

An expense is an expense, how can it have an ROI?


Dr. PDG said...

Really enjoyable posting, Andrew!! My own PhD research established conclusively that project management is in fact nothing more than a "process, method or system". That is, project management is HOW we approach delivering something. Which supports much of your position.

About the only part I would challenge would be the part about ROI. IF an effective project manager can save money (without cutting corners on quality or by increasing risks) and/or can deliver the project faster, thereby generating revenues more quickly and/or increasing market share, then we can calculate the contribution BETTER project management has made.

Having said that, in far too many cases I see, the client or project sponsor has imposed unrealistic budgets in terms of both time and cost, which has led to a rather abysmal performance of projects being delivered late and over budget.

Keep up the good work, Andrew. If you ever want to go for your PhD, your theory would be a welcome alternative to counteract the blatant and sometimes embarrassing efforts of PMI to turn project management into something more than what it is- a delivery method.

Thanks again...

Dr. PDG, writing from Kuala Lumpur, Malaysia

SARWIK said...

Interesting article. For my PMP exam prep, I found useful material on PMStudy, They provide a complimentary 200 question simulated test and we can take also other practice tests starting at $25.The PMP Certification