The

 need  and  importance  of  project  management  

Why   do   we   need   project   management?   Why   is   it   so   important?   What   is   project  

management  all  about?  And,  to  start  with,  what  are  typical  examples  of  projects?    

Take   for   example   a   bridge.   It   was   designed   and   developed   by   multidisciplinary   teams.   It   was  
built  in  a  certain  time  frame.  And,  also  important;  it  serves  a  purpose  of  connecting  different  
pieces  of  land.  

Or  a  plant.  A  very  different  setting  and  context,  but  rather  similar  characteristics.  Something  
unique,  realized  within  certain  constraints,  facing  technological  challenges  and,  last  but  not  
least,  enabling  the  creation  of  value  for  a  company.  

Or   a   highly   innovative   part   of   a   high-­‐tech   system.   Again   a   different   context,   but   check   the  
similarities   with   the   previous   examples…..   Certain   constraints.   Multidisciplinary   teams   that  
join  forces.  High  levels  of  uncertainty.  Full-­‐filling  a  need,  solving  a  problem.  Projects  intend  
to  create  value!  

But  also  closer  to  your  home  situation  you  can  find  projects.  Think  of  building  a  shed  in  your  
garden  or  moving  house.  Most  probably,  you  would  set  your  budget  and  involve  a  team  of  
specialists  to  make  your  dream  come  true  (….and  not  end-­‐up  in  a  nightmare….)    

Even   developing   this   MOOC   took   place   in   a   project   setting.   We   started   defining   our   goals,  
we  carefully  prepared  the  design  and  ended  up  delivering  this  course  to  you.  

All   ingredients   a   of   project   come   together   in   Professor   Turner’s     complete   definition   of   a  

project.    In  essence,  a  project  is  a  temporary  organization,  brought  to  life  to  deliver  a  unique  
scope,  within  the  given  boundary  conditions.    

Whatever   the   unique   character   of   a   project   is,   it   will   always   have   a   number   of   distinct  
phases.  

A   typical   project   life   cycle   consists   of   several   phases.   In   the   first   phase,   a   potential   future  
project   is   identified,   the   potential   value   is   assessed   and   the   alignment   with   the   business  
strategy  is  verified.  In  the  second  phase,  different  options  are  investigated  and  a  preferred  
solution   is   selected.   In   the   third   phase,   the   project   is   defined   in   more   detail   and   funding  
needs   to   be   obtained.   At   the   end   of   this   “define”   phase     the   investment   decision   can   be  
taken.    

These   three   phases   together   (appraise,   select   and   define)   are   called   the   front-­‐end  
development  phase  of  a  project.    

Only  after  a  positive  investment  decision,  the  building  phase  can  be  entered  (this  is  phase  4)  
and  in  phase  5,  the  project  is  handed  over  to  the  client.  

 
Between   these   phases,   stage   gates   are   defined.   At   these   stage   gates,   project   reviews   take  
place  and  it  is  decided  whether  or  not  the  project  can  enter  the  next  phase.    But  to  review  a  
project,  we  need  to  know  something  about  project  success.  

 What   seems   successful   for   one,   can   be   perceived   very   unsuccessful   by   others.   Take   the  
famous   example   of   the   Sydney   Opera   House.   It   is   claimed   a   failure   in   terms   of   project  
management  and  at  the  same  time  a  huge  long  term  business  success….  How  come?    

 To   define   project   success,   we   should   realize   that   it   contains   various   dimensions.   The  
traditional  way  of  looking  at  success  is  by  time,  cost  and  quality.  This  is  what  in  the  literature  
is   called   “the   iron   triangle”.   Basically   this   is   project   efficiency.     The   customer,   however,  
needs   to   be   satisfied,   isn’t   it?   Without   a   satisfied   customer,   no   future   business.   And   in   an  
even   longer   term,   we   should   develop   our   resource   base,   to   be   prepared   for   future   needs  
and  challenges.  So  project  success  is  not  just  a  simple,  single,  statement.  Early  in  a  project  
you  need  to  clarify  which  type  of  success  you  are  going  for.  Only  then  you  know  on  which  
aspects  you  can  steer  your  project.  Let’s  now  go  back  to  the  project  life  cycle.  

 The   final   investment   decision     (FID)   is   quite   an   important   milestone.   In   the   early   project  
phases,   your   level   of   influence   is   high   and   the   scope   can   be   changed   relatively   easy,   without  
too   much   impact   on   the   overall   costs   and   schedule.   At   this   stage   of   the   project,   most   of   the  
work   performed   is   paper-­‐based.   In   the   worst   case   a   lot   of   man   hours   are   wasted,   if   the  
project   does   not   continue.   This   is   different   after   FID.   Then   expenses   increase   quickly,   for  
example   because   of   the   ordering   of   equipment   with   long   lead   times.   The   influence   level  
during  the  execution  phase  therefore  decreases  rapidly  and  changes  are  much  more  difficult  
to  implement.  So  defining  your  project  very  well  is  essential  for  a  smooth  execution  later  on.  
Hence  a  thorough  front-­‐end  phase  is  crucial!    

 It  is  not  only  for  financial  reasons  that  it  is  wise  to  invest  in  the  front-­‐end  phase  of  a  project.  
It  is  also  wise  from  a  value  creation  perspective.  A  project  that  is  well  defined  in  the  front-­‐
end  phase  of  a  project  has  a  good  starting  point  for  becoming  successful,  assuming  that  the  
later   project   phases   of   execution   and   operation   are   also   managed   well.   An   ill-­‐defined  
project,  however,  can  never  be  turned  around  into  a  very  successful  project.  

 The   potential   of   value   realization   is   created   in   the   early   project   phases!   But   of   course,   a  
well-­‐defined  project  can  still  be  derailed  or  even  destroyed  by  failing  management  in  later  
project  phases.      

 For  us,  the  essence  of  project  management  is  in  the  integrated,    phased  approach  of  project  
management.     Integrated   in   a   sense   that   the   overall   project   life   cycle   is   considered.   But   also  
integrated  by  involving  the  different  players  in  an  early  stage  of  the  project.  It  is  not  about  
“silo   management”,   it   is   about   bringing   together   the   parties   throughout   the   supply   chain  
already  in  the  early    phases.    

From   our   research,   we   concluded   the   importance   of   the   early   project   phases.   Value   is  
created  not  by  just  starting  the  works,  but  by  carefully  thinking  upfront  and  trying  to  really  

 
understand  the  problem  at  hand.  Lots  of  challenges  in  project  execution  can  be  traced  back  
to  an  insufficient  front-­‐end.  Hence  let’s  think  before  we    act!    

And  it  is  not  only  about  front-­‐end  activities,  performed  following  a  structured  approach.  Yes,  
this   is   a   necessary   ingredient   of   successful   project   management,   but   not   sufficient.     In   the  
end  it  is  about  the  people  that  actually  perform  the  project.  The  team  can  make  or  break  the  
project:  people  are  key!  

 An   essential   ingredient   of   project   management   is   the   selection   of   a   heterogeneous   team,  

fitted   to   the   specific   project   characteristics   and   project   context.   And   even   before   selecting  
the   team   members,   the   right   project   manager   should   be   appointed   to   the   job.   Not   the  
project   manager   that   simply   is   available,   but   the   one   that   seems   best   equipped   to   do   the  
task.    

And  this  brings  us  to  a  more  strategic  part  of  project  management:  most  companies  perform  
multiple   projects   at   the   same   time,   sharing   resources.   How   to   select   the   right   projects   for  
your  company?  

 To   improve   the   chance   of   project   success,   the   alignment   of   the   project   goals   with   the  
company   goals   is   crucial.   If   your   project   goals   do   not   align   with   the   higher   level   company  
goals,  it  will  be  harder  to  get  support  for  your  project,  whenever  needed.  Hence  while  you  
are  defining  your  project,  make  sure  that  there  is  a  strategic  fit  between  your  project’s  goals  
and  your  company’s    goals.  

Next,  it  is  about  adding  the  project  to  the  overall  portfolio  of  projects  in  your  company.  Does  
it   fit?   Do   you   have   the   right   resources   to   execute   the   different   projects?   When   deciding  
upon  individual  projects,  the  business  case  could  play  a  central  role.  

The   business   case   shows   the   value   of   the   individual   projects.   It   includes   both   sides   of   the  
coin:  the  investments  as  well  as  the  expected  benefits.  This  business  case  should  not  only  be  
approved  at  the  final  investment  decision,  but  also  checked    when  a  project  progresses  from  
one  stage  to  another.    

 This   video   was   about   the   need   and   importance   of   project   management   and   the   basic  
ingredients  of  project  management.  Or  summarized  in  one  sentence:    

Project  management  is  about  doing  the  right  project  in  the  right  way!