Strategic Project Management. Product Development

Introduction

Background to the study

The high rate of globalization has led into a shift within the business environment. One of these changes is evident in the high rate of competition among firms in different economic sectors. In order to survive into the long term as going concern entity, individual firms have to formulate and implement strategies aimed at improving their competitive edge. In the wake of these changes in business environment, management teams have incorporated the concept of strategic management (Harris 2009, p.109). As a result, they have been able to formulate comprehensive objectives, goals, visions, values, timelines, roles and responsibilities. In addition to strategic management, management teams of firms have realized the importance of integrating project management in their operation in an effort to attain strategic objectives. Strategic objectives refer to objectives that contribute towards a firm’s success (Gray & Larson 2003, p.8).

According to Wessel (2007, p. 1), firm have realized that it is not easy to attain competitive advantage without effective project management. According to Wessel (2007, p.1) organizations currently are utilizing project management in the process of implementing their projects. This arises from the fact that projects have become an integral part of organizational growth and survival. Wessel further asserts that project management contributes towards a firm creating a high value through improved business processes. Lester (2007, p.5) defines project management to include the process of planning, monitoring and controlling all issues related with a project in addition to motivating individuals involved in execution of the project. Lester (2007, p. 5) is of the opinion that projects execution does not only depend on the competence of the parties involved in its execution but also the extent to which they are motivated. The resultant effect has been an explosive adoption of project management by organizations in an effort to attain their strategic objectives and goals (Burke 1999, p.13). In addition to the increment in the number of organizations incorporating project management in their operation, firms are also executing a number of projects simultaneously. This has raised concern amongst management teams on the most effective way to undertake the projects thus enhancing their probability of attaining their strategic objectives. For this to be attained, it has become paramount for firms’ management teams to integrate the concept f to cost, time and performance (Fewings 2005, p.11).

Aim

From the background study above, it is evident that there is a strong correlation between project management and attainment of a firm’s strategic objective. This report is aimed at critically reviewing and reflecting on the reasons why organizations are using project management in an effort to achieve their strategic objectives.

Scope

The report is organized into a number of sections. The first section entails evaluation of importance of project management in the process of selecting the intended project. The process through which project management enhances a firm to incorporate a new product or service is also analyzed. This is attained through ensuring that the project is specific, measurable, achievable, and realistic and fits a particular time frame. The importance of project management in providing a roadmap towards effective planning and monitoring of projects is analyzed. The report illustrates how project management creates a link between business strategy and the intended project plan. Finally a conclusion and a number of recommendations are given.

Project selection

Considering the fact that firms in various economic sectors have integrated projects in a quest to attain their profit maximization objective; it has become paramount for management teams to conduct optimal selection of projects to be implemented (Maylor 2003, p.23). According to a study conducted by Field and Keller (1998, p.34), approximately 30% of projects implemented are not completed due to cancellation when they are halfway completed. In addition 190% of all the projects consume more than the budgeted amount while 220% of them become late thus losing their relevance. Effective project selection contributes towards a firm attaining its strategic objectives (Northrup 2004, p.120). This arises from the fact that the probability of the project failing is minimized. Contemporary organizations are faced with a challenge of ensuring that the project selected is linked with their strategic objectives and goals. In addition, they also have to determine the most effective way of dealing with the increasing number of projects. As a result, the projects to he implemented by firms must be in accordance with the firm’s goals. Meredith and Mantel (2009, p.43) defines project selection as the process of conducting comprehensive evaluation of individual or a number of projects. This leads to choosing the projects which will lead to the firm attaining its goals. Each project has got its own unique characteristics some of which relate to benefits, risks and benefits. The benefits, cost and degree of risk associated with a particular project are not certain to the firm (Frigenti & Comninos 2002, p. 59). Considering the diversity in project characteristics, it is important for management teams to conduct project selection which is a challenging task. This becomes even more challenging if project selection involves more than one project. Through project management, firms are able to conduct effective project selection through incorporation of a well designed project selection criteria. According to Cleland and Ireland (2006, p.211), the projects selected and implemented should act as a building block towards attainment of competitive advantage via attainment of the formulated strategic objectives. Cleland and Ireland further assert that implementation of projects which are not in line with the firm’s strategic objectives may distract a firm from attaining the desired growth. Lack of effective project selection may culminate into the firm attaining less than the desired results. The criteria to be considered in selecting a project relate to the expected profit margin, degree of risk, resources required, project duration, lifecycle phases, technological requirements, urgency of need (Cleland & Ireland 2006, p.213).

Enhances new product development

In the 21^st century, business environment has become very competitive. As a result, firms are increasingly integrating the concept of new product development in an effort to attain a high competitive advantage relative to their competitors thus attaining their strategic objectives. In order for new products developed to enhance the firm’s competitiveness, the products must be supplied to the market at the right time. This arises from the fact that opportunities have a short window (Moore 2010, p.23). Project management ensures that firm’s management teams conduct effective product development through integration of the SMART concept which ensures that the project selected is specific, measureable, achievable, and specific and time bound (Boddy 2002, p.4). In developing a new product the firm’s management teams must ensure that the entire project is well conceptualized. The project being implemented must be specific to the intended objective. This will serve in minimizing ambiguity of the intended project. Project management enables the management team to determine the effective ways of monitoring the project being implemented. This is attained through conducting periodic review of the objectives to ensure that the project is in line with the intended objective (Termini 1999, p.15). Effective monitoring of the project can only be attained if the formulated goals are measurable. In order for the project related to new product or service development to be successful, it must be ensured that it is achievable. This can only be attained if it is possible to incorporate teamwork (Toney, 2002, p.60). The resultant effect is that the firm’s short and long term objective are successfully completed. This serves in minimizing chances of the project from delaying or getting out of track. Project management ensures that the project being implemented is realistic in terms of the associated technicality and financial resources required. Project management ensures that the project is implemented within the set time frame. This eliminates delays which may result into an increment in the cost involved. In addition, lack of meeting the set time frame may result into the project losing its relevance. Through project management, a firm is able to attain the formulated strategic objectives (Grundy & Brown 2002, p.12).

Providing a roadmap towards effective planning and monitoring projects

Attainment of firms strategic objectives is dependent on the effectiveness with which firm’s undertakes their planning process (Westland 2007, p. 56). Project management aids firms to attain its strategic objectives through effective project implementation. In their operation, firms in different economic sectors have formulated strategic documents which define their goals and objectives. However, these documents do not spell out how their goals will be attained. Integrating project management during the inception of the project contributes to attainment of the firm’s strategic objectives (Yoshino & Rangan 1995, p.18). This is attained through incorporation of various project management models. One of these related to Web Breakdown Structure (WBS). Fad (2001, p. 12) defines Web Breakdown Structure as a set uniform, logical and consistent process of dividing the entire project into a number of small and manageable components. The core objective of breaking down the project is to attain improve the project planning and monitoring. Fad (2001, p.13) asserts that WBS is a deliverable oriented concept which facilitates feed-forward in relation to information. Through WBS firms are able o attain strategic objectives through clear definition of tasks, cost estimation via budgeting, time estimates, scheduling, resource allocation determination of project performance and its productivity ( Rad 2002, p.4). Work Breakdown Structure enables a firm to be effective in estimating the cost to be incurred in executing the project. This aids a firm in undertaking complex projects since the project is broken down into a number of manageable components. According to Nicholas (2004, p.269) cost estimation enables a firm to minimize its project financial fate. In addition, WBS enables the entire project team to visualize the entire project.

Integration of project management enables the firm’s work force is able to understand its strategic objectives. The result is an increment in the probability of the firm attaining its strategic objectives. This arises from the fact that development of WBS begins with the firm’s policy objectives which are connected to strategic objectives (Crawford & Cabanis-Brewin 2006, p.33).

Provides the link between business strategy and the intended project plan

Currently, management teams are formulating projects in an effort to attain their strategic objectives thus enhancing organization performance and future growth (McGee et al. 2005, p. 23). However, implementing the project has become a challenge due to lack of link between the project plan and business strategy. As a result, the key intention of management teams is to ensure that the job is done. Project plan which entails project goal, scope, deliveries, milestones and project resources is the initial stage of implementing a project (Heldman 2009, p.285). Despite the fact that the managers may be focusing on ensuring that the project is executed efficiently in terms of time and money, the results may not be optimal which means that the project is a failure. This arises from lack of link between the firm’s project plan and business strategy. Project management ensures that the firm’s projects are strategically managed rather than being operationally managed. This is attained through integration of project strategy (PMI 2003, p. 2). In addition to project strategy, project management enhances attainment of strategic objectives through incorporation of Project Management Office (PMO). As a result, the firm is able to execute a number of projects through development of expertise within the organization. This is attained through determination of the existing relationship between the various projects (Norrie 2008, p.73). For example, the management team is able to establish the link that exists between the various projects in terms of skills and resource requirements. In addition, project management leads to identification of the existing interrelationship between a firm’s strategic goals and its projects. The resultant effect of integrating project management is that the firm is able to translate the formulated strategies into a reality (Rad & Anantatmula 2010, p.123).

According to Nicholas (2004, p. 45), most firms in the 21^st century have become project intensive. However, the nature of some firms such as those dealing with construction, engineer-procure-construct (EPC), software development, general construction and aerospace is project based. Incorporation of project management plays a major role in ensuring that these firms attain their strategic objectives (Gaynor 2004, p.120).

Conclusion

Project management plays a significant role in attainment of strategic objectives through a number of ways. Project management ensures that a comprehensive criterion is considered in the process of selecting projects to be implements (Jugdev 2007, p. 76). This means that the firm is able to minimize the probability of the project failing. Through effective project selection, a firm’s management team is able to implement projects which are in line with its strategic goals and objectives. This increases the probability of the firm attaining its strategic objectives (Crawford 2002, p.227).

Project management ensures that effective planning and monitoring are integrated in the process of implementing various projects (Turner & Muller 2005, p.49). As a result, a firm is able to undertake some complex project which contributes towards the firm attaining its strategic objectives hence its competitive advantage. This arises from incorporation of project management concepts such as the work breakdown structure. Through work breakdown structure, a firm is able to implement complex projects by breaking it down into manageable components (Callahan & Brook 2004, p.54). In addition, work breakdown structure enables a firm to conduct effective project cost estimation. The resultant effect is that the firm is able to minimize losses which may occur as a result of over or under estimation. On the other hand, project management improves the monitoring process. The resultant effect is that the firm is able to minimize uncertainty associated with project management. Through integration of the SMART concept, organizations are able to implement their projects successfully. Project management contributes towards establishment of a link between the organizations’ project plan and its business strategy (Schmidt 2009, p.22).

Recommendation

For project management to result into attainment of strategic objectives, firm’s management teams should consider the following.

• Conduction of comprehensive project evaluation in order to select the most viable project.
• Incorporation of project management models such as critical path method so as to ensure that the projects are implemented cost effectively.
• Ensuring that the parties charged with implementing the project are adequately motivated.

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