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

  • Post last modified:25 June 2021
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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).

Process GroupDescription per PMBOK® Guide – Third EditionCommon Terms
InitiatingAuthorizing the project or phase.“preliminary planning”
“kicking off”
PlanningDefining and refining the objectives of the project and selecting the best course of action to attain those objectives.“defining”
“developing the plan”
“setting the stage”
ExecutingCoordinating the people and resources to implement the plan.“making it happen”
“getting it done”
ControllingEnsuring project objectives are met by monitoring and measuring progress regularly to identify variances from the plan so that corrective actions can be taken.“tracking progress”
“keeping on course”
ClosingFormalizing acceptance of project or phase project or phase “client acceptance”“client acceptance”
Table: Description of Project Management Process Groups

Definition of Project Management

The achievement of a project’s objectives through people, and involves organizing, planning and control of the resources assigned to the project together with the development of constructive human relations with all those involved, both in company and with the other companies involvedHarson
Project Management is the application of knowledge, skills, tools and techniques to project activities in order to meet or exceed stakeholder needs and expectationsProject Management Institute (PMI)
Project management is the process by which projects are defined, planned, monitored, controlled and delivered such that the agreed benefits are realised.

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.

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. More on this in Chapter 16.

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

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