What is Project Management? Definition, Importance, Characteristics, Functions

What is Project Management?

Project management is the process of defining, planning, organizing, monitoring and controlling of all aspects of a project and motivating all involved to achieve project objectives of safety and completion within a defined time, cost and performance.

If you are like most people, you are “pretty sure” you know what projects are, and you “think” you know what project management is (and what a project manager does), but there’s always a varying amount of uncertainty in those perceptions. So, let’s start off by clarifying some key concepts. Project management is simply the process of managing projects (and you thought this was going to be difficult).

While this definition is not particularly helpful, it does illustrate three key points:

• Project management is not “brain surgery.” Yes, it covers a vast array of subjects, processes, skills, and tools, but the key fundamentals of project management are straightforward and are consistent across industries.
  
• To better understand project management, we need to understand what a project is. The nature of a project provides insights into the scope and challenges of project management.
  
• To better understand project management, we need to understand what is implied by the term managing and how this compares against traditional business management.

The Project Management Institute (PMI), the globally recognized standards organization for project management (www.pmi.org), defines project management as a set of five process groups ( Table) and nine knowledge areas . These references are taken from the PMI ‘s A Guide to the Project Management Body of Knowledge, Third Edition (PMBOK® Guide – Third Edition).

Definition of Project Management

Project management is the process by which projects are defined, planned, monitored, controlled and delivered such that the agreed benefits are realised.

Project Management Institute USA defines project as ‘a system involving the co- ordination of a number of separate department entities throughout the organization and which must be completed within prescribed schedules and time constraints.

According to Sinha and Sinha a project is not a mere action or an activity or an attempt towards a particular aim; it is rather an integrated effort, including multifarious actions and activities, towards that aim.

Importance of Project Management

A good project management offers various techniques and guidelines to manage employees and workloads. Project management provides the many benefits in an organization.

1. Saving cost
2. Improving working conditions
3. Improving financial management
4. Resolving problems
5. Determining risk
6. Improving the product quality

Saving cost

Project management offers a common methodology for managing the project, i.e., if the processes and procedures are planned once, then they can be used in all the future projects again. Consequently, it helps in saving the cost and time required in completing the project.

Improving working conditions

If the projects are successful, the client will be more involved in the projects. This helps in improving the working environment of the organization, which in turn encourages the morale and confidence of the project team.

Improving financial management

Better estimation of the actual costs involved in the project helps in managing the budget of the organization. This results in better financial predictability and cost control.

Resolving problems

Team members in a project spend a lot of time and energy in dealing with project problems. This is because the project team members do not know how to resolve the project problems. If the project is properly managed and planned, then the process of project management helps in solving the project problems quickly.

Determining risk

The process of project management helps in identifying and managing risks in the near future.

Improving the product quality

The process of project management helps team members understand the needs of customers. Once customer needs are recognized, team members can implement quality control and assurance techniques to fulfil customer demands.

Characteristics of Project Management

Project management requires attention for goal-oriented systems, the environment, subsystems and their relationships. This is what makes project management a ‘systems approach’ to the management.

The application of principles and practices from the classical and behavioral and systems viewpoints to the unique requirements of projects has led to a new set of concepts which may be called the ‘project viewpoint’.

Cleland and Kind have identified the following characteristics of project management:

1. Single Focal Point
2. Project Integration
3. Inter-department Communication
4. Focuses on Delivering a Product
5. Works in Both Direction
6. Team Work
7. Multifunctional in Nature

Single Focal Point

The project manager is the single focal point for bringing together all the necessary resources for achieving the project objectives. He/she formally heads the project organization and operates independently the normal chain of commands. The project organization reflects the cross-functional, goal-oriented nature of the project.

Project Integration

Since each project requires a variety of skills and resources, many functional areas may perform the work in a combined form. The project manager is responsible for integrating the people from different functional disciplines working on the project.

Inter-department Communication

The project manager will negotiate directly with the functional managers for support. The functional managers are responsible for the activities of the individuals and for the personnel coming under the scope of their functional groups. However, the project manager has to concentrate on integrating all the project activities and overseeing the activities from the beginning to end.

Focuses on Delivering a Product

The project manager focuses on delivering a particular product or service at a certain point of time and cost to the satisfaction of the technical requirements. In contrast, the functional units must maintain an ongoing pool of resources to reach the ultimate organizational goals instead of the limited project goals.

Thus, conflicts may often arise between the project and functional managers over the optimum allocation of resources to a project.

Works in Both Direction

A project in an organizational structure has two chains of command. One is the vertical, functional reporting relationship and the other is the horizontal, project reporting mechanism.

Team Work

For rewarding incentives and distributing responsibilities, the decision making, accountability, outcomes and rewards should be shared among all the members of the project team and the supporting functional units.

Multifunctional in Nature

Though the project organization is temporary, the functional units from which it is formed are permanent. Thus, when a project ends, the project team is scattered and the project personnel either return to their functional units or they are reassigned to new projects.

Projects may originate from different areas of the organization. Product development and related projects tend to emerge from marketing whereas technological applications originate in Research and Development (R&D).

Project management sets into motion numerous other support functions such as personnel evaluation, accounting and information systems.

Successful Project Management

In order to reduce the cost of constructing a project, organizations should consider various factors such as cost and time for the successful competition among projects.

Following are the key critical success factors in project management:

1. Adequate project formulation
2. Project organization
3. Implementation planning
4. Availability of funds on time
5. Effective monitoring

Adequate project formulation

Project formulation is the process of converting project ideas into project proposals in a structured manner. Generally, project formulation suffers from the following shortcomings:

• Use of informal methods for estimating the costs and benefits, such as maintaining paper records instead of using computers
• Deliberate overestimation of benefits and underestimation of cost of constructing a project
• Faulty judgements due to lack of experienced managers and employees

It is essential for an organization to avoid these shortcomings in order to have adequate and meaningful project formulation.

Project organization

A sound organization possesses the following characteristics:

• The proper working environment for employees
• Well-defined working methods and systems
• Proper rewards and penalties to employees for their performances and faults

Implementation planning

After taking investment-related decisions, it is necessary for an organization to do proper implementation planning before commencing the actual implementation. Proper implementation planning includes the following steps:

• Developing a plan for various activities such as land acquisition, tender evaluation, recruitment of the staff, construction of buildings and creation of an industrial plant.
  
• Estimation of the resource requirements such as manpower, materials and money in a project.

Availability of funds on time

It is important to have funds on time for taking advanced actions in the project activities. The timely availability of funds facilitates the organization to negotiate the cost of the project with suppliers and contractors.

Effective monitoring

In order to have successful management of the project, a project monitoring system must be established in the organization. This is because effective monitoring helps in analysing the emerging problems and taking corrective actions for the project activities. Following are the factors that should be kept in mind while developing an effective system of monitoring:

• It should emphasize on the critical aspects such as the finance of the project management.
• It should be simple and not overcomplicated as it may result in a lot of documentation and wastage of resources.

Scope of Project Management

Organisations do not immediately implement a project after finalising the project idea. Once a project idea is proposed, several aspects of the project including project goals, project deliverables, requirement of resources, time frame, etc. need to be finalised and documented. This is where project scope comes into picture.

Project scope is the breadth of a project providing details about how much a business would be affected, what resources are required, how much time the project would take to complete, etc. The bigger the project, the more details and planning are needed to successfully bring the project to fruition.

Project scope is a part of project planning involving the process of setting project goals, identifying processes, assigning tasks and allocating resources. Defining a project scope is necessary for setting a stage for project plan development, which needs to be done by elaborating on the collaborative efforts of the project manager and the customers.

Let us discuss each of scope of project management elements in detail.

Project Objectives

The objectives of a project are documented in project scope. Project objectives refer to the aims of a particular project. As discussed earlier, all projects have specific objectives.

For example, the objective of a product to launch a new product would be to capture certain percentage of market share in a particular region.

Deliverables

These are tangible or intangible outcomes to be achieved on the completion of a project. A tangible outcome can be an item or article while an intangible outcome refers to services delivered to customers or other beneficiaries.

For example, a product is the tangible outcome of a product development project. On the other hand, accommodating more passengers is an intangible outcome of a project for construction of a new airport terminal.

Milestones

These are significant events that may occur at a point of time during the project. Milestones indicate the direction of the project and ensure that project activities are performed according to the schedule.

For example, different milestones in a product development project could be to generate a product idea, create a product prototype, develop a product, test the market, collect feedback, and launch the product. An organisation could set different time frames to achieve these milestones.

Technical Requirements

These refer to the technical specifications for accomplishing project tasks and activities, such as speed and capacity of database systems.

For example, the AADHAR card project started by the government of India involves various technical requirements, such as equipment for taking finger prints, retina images and reliable data storage systems for storing personal information of Indian citizens.

Limits and Exclusions

Limits of project scope outline the borders of project by describing what the project could not achieve. For example, a project on ‘safe drinking water for all’ project may be limited to certain districts of a state. This is the geographical limit of the project.

Exclusions of a project outline the elements that are beyond the scope of the project. For example, poverty eradication project of the government would exclude the affluent sections of the society.

Constraints and Risks

Constraints of a project describe the lim- itations of resources for accomplishing a project. For example, projects are required to be executed with a given budget; thus, budgets act as constraints in a project. Similarly, unavailability of skilled labour or equipment could act as project constraints.

Risks refer to the deviations of the actual outcome from the expected outcome. The higher the probability of a project to achieve its objectives, the lower would be the level of risks involved. However, different projects involve different risk levels.

Principles of Project Management

Principles are a set of standards or laws which serve as the basis of various ideas, practices and procedures. According to Webster, principle can be defined as “a general truth, law on which others are founded or from which others are derived.”

Project management is based on certain universally applicable principles. These principles are given by James Chapman. Figure shows the various principles of project management:

Principle of Business nature and commitment

This principle states that organisations should identify their project goals and business values to fulfill their commitment. Recognizing the nature of business and volumes always help a project manager in executing the project accordingly.

According to James Chapman, around 50 per cent of project management is all about paying attention and determining what is there inside and outside your operational arena. To close the project successfully within the given time, there must be a mutual commitment between the sponsor and the project team.

Principle of Project Success

The objectives of a project remain unfulfilled till the success of a project. Everyone on a project should know what the term success signifies for that particular project. The success of a project may be defined in terms of various deliverables such as scope, return, and fulfillment of commitment, time, cost, business expansion and efficiency. However, the key to the success of a project lies is recognising customers’/clients’ requirements and fulfilling their requirements in terms of quality, services, price, utility etc.

Principle of Project Strategy

It is one of the vital principles of project management. The principle of strategy involves setting-up of a result-oriented project plan that helps the entire project team to execute the plan effectively. This principle defines the scope, schedule, and approach for a project. The project strategy should be structured in adequate detail and have a set process to follow the project plan and complete the project within the allotted time.

Principle of team Building

As you know, project is not a one man show and therefore, it cannot be completed without the syn- chronised efforts of a team. A project team may comprise of various human resources who are very competent in their respective domains of operations. There should be sound coordination among the members working as group or team.

This principle aims to create the sense of integration among team members so that they can work collectively towards the common goal. Team building not only saves time of the project, but also minimises individual efforts and develops a good working environment and culture around.

Principle of Project assessment

This principle focuses on keeping a tab on project status and provides feedback to the linked workforce on regular basis. It helps enhance the project performance and quality. In addition, it also helps consistently deter- mine the associated risks and opportunities.

Principle of Documentation

Documentation plays a vital role in every discipline of a project. Right from project planning to its implementation, each phase of a project is recorded and maintained through documentation. Without documentation it becomes quite challenging for project teams to have baseline controls, communication, presentation, decisions etc. However, with rapid diversification in the field of technology, documentation has become digital.

Principle of Satisfaction

Every project is initiated with certain specific objectives. Satisfaction of customers/clients is the utmost objective of any project. To satisfy customers/clients, some projects even introduce changes in their plan.

For example, the project plan of an automobile organisation is to facilitate the customers by providing them better mileage and fuel consumption attributes. However, keeping in mind the level of competition and customer satisfaction, the organisation may change its project plan to provide the customer free servicing facilities. This increases the level of customers’ satisfaction.

Pro-active Principle

The issues that are ignored when they crop up for the first time generally grow complex in future. Therefore, it is important for project professionals to proactively address the risks and confront them at the earliest. As a project manager, you cannot wait for an issue to resolve on its own, a festering issue will bleed the project to a horrible end.

Trends in Project Management

In addition to the focus on organizational process improvements, there are other trends in business and project management that a first-time project manager is likely to encounter (that they may not have just a decade or less ago).

1. Managing Vendors
2. Facilitating a Selection Process
3. Risk Management
4. Quality Management
5. Managing Virtual, Cross-Functional, and Multi-Cultural Teams
6. Working with PMOs and Corporate Governance Processes
7. Change Agent
8. Servant Leadership

Managing Vendors

With the increased outsourcing of non-core activities, more projects leverage one or more vendors (suppliers) to get work done.

Facilitating a Selection Process

In order to determine which vendors you will partner with to get work done, a selection and evaluation process is normally conducted.

Risk Management

Coinciding with the focus on enterprise wide process improvements and in response to past project experiences, more organizations are placing additional emphasis and formality on their project risk management processes.

Quality Management

Much like the factors driving the emphasis on risk management, the link between rigorous quality management procedures and improved project management practices continues to strengthen.

Managing Virtual, Cross-Functional, and Multi-Cultural Teams

With the continuous advancements in workgroup and communications tools, the increased integration of processes within an organization, and the continuous drive for increased organizational efficiencies, it is very likely that your project team will consist of members from different physical locations (virtual), different functional departments (cross-functional), or different cultures (multi-cultural, global).

Working with PMOs and Corporate Governance Processes

If you are working in any type of corporate or multiple business unit environment, you will most likely deal with Project Management Office (PMO) or other corporate governance processes.

Change Agent

Since most projects represent a “change” to business as usual, the project manager is expected to play a key role in leading the stakeholders through the change and acceptance process.

Servant Leadership

Due to a lack of formal authority; the need to understand the requirements of all stakeholders; and the importance of facilitation, collaboration, and managing expectations; there is a growing awareness that a servant leadership style is paramount for effective project management.

Objectives of Project Management

Now that you understand the meaning of project management, it is important to discuss the purpose of project management. Project Management helps in planning, coordinating and controlling the complex and diverse activities of various industrial and commercial projects.

A project is exposed to risks due to various factors such as change in government policies, changes in technology, shortage of funds, decline in the demand for products and services, rise in price of inputs, and so on.

Project management enables an organisation to successfully deal with these risks. The purpose of project management is to foresee or predict as many risks as possible and to plan, organise and control activities so that the project is completed successfully.

The objectives of project management are mentioned below:

• Planning
• Organising
• Staffing
• Directing
• Monitoring
• Controlling
• Innovation
• Representing

These objectives help in:

• Ensuring timely completion of projects
• Meeting the project schedule
• Maintaining the quality of the deliverables
• Ensuring the completion of project in the given budget
• Ensuring customer satisfaction

Advantages of Project Management

Project management helps an organisation in effectively and efficiently carrying out projects through use of tools such as project scheduling and budgeting.

According to Tom Peters, co-author of the book, In Search of Excellence, “The whole discipline and art of project man- agement is going to be the essence of management training, operational excellence, and value added.”

Project management has a number of advantages. Some of these are as follows:

• It aligns the project with the strategic goals of the organisation.
• It reduces the project cost through effective planning and management of resources.
• It focuses on the performance of the workforce by providing them with training.
• It increases the project success ratio.
• It ensures that the pre-stated objectives are achieved.
• It improves the coordination among resources used in a project.
• It reduces risks associated with the project.
• It delivers predictable as well as desired results.
• It aligns the expectations of stakeholders with project performances.
• It reduces the project cycle time.

One of the main advantages that project management offers is to add value to a project. Let us understand how project management adds value to a project. An organisation took up a contract for cleaning up a nuclear site. Initially, the organisation was under pressure to execute the project with very limited capital and strict deadlines.

However, the organisation set an example by completing the project ahead of schedule with less than the estimated cost by effectively implementing the project management practices, such as reducing the project budget and focusing on the performance. This was possible due to the project management initiative that reduced the cost of the project and increased the efficiency by effectively managing the available money and manpower.

Success Factors in Project Management

The success of a project directly depends on various factors including extensive front-end planning and project definition work, effective project delivery among others.

Some of the key factors that lead to the successful closure of a project are as follows:

• A clear mission/vision with agreed goals and success criteria and clear understanding of desired and expected values driving the project culture
  
  
• Clear understanding of key stakeholders, objectives with a defined statement of outcomes
  
  
• Project plan and methodology being understood and agreed by all key parties, including provision of adequate resources and contingencies
  
  
• Project feasibility in terms of resources, contingencies, risks and outcomes
  
  
• Adequate resources being dedicated for the project
  
  
• Understanding, ability, and experience of the project manager and support staff including project governance, dispute resolution procedures to stimulate trust
  
  
• Adequate communication and project tools
  
  
• Project competencies and organisation structure
  
  
• Integrity, commitment, support, approach and training of staff
  
  
• External factors such as political and cultural awareness

Functions of Project Management

1. Project Integration
2. Strategic Planning
3. Resource Allocation
4. Scope Management
5. Quality Management
6. Time Management
7. Cost Management
8. Risk Management
9. Human Resource Management
10. Contract Management
11. Communication Management

Best Project Management Courses

Project management skills are in demand. If you are ready to get started, consider enrolling in the Google Project Management: Professional Certificate Learn the job-ready essentials of project management in six months or less, such as initiating projects, risk management and change management. Also we have made list of best project management courses as there are a plethora of options available, and it can be challenging to identify the best one.

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The ideal project management tool selection will eventually rely on the particular requirements of your team. We suggest experimenting with the free versions of various tools to gauge your team’s comfort level and then proceeding accordingly.