Monday 6 December 2021

Systematic Project Management: Benefits and Costs

A systematic formalized approach to project management has a number of advantages over other approaches based on functional management principles, i.e. when managers responsible for individual management functions informally coordinate work on a given project with colleagues from other functional units. 

At the same time, each of the managers, as a rule, adheres to the rules and procedures developed for his functionally oriented unit.

A systematic approach to project management is becoming increasingly popular for the simple reason that when it is used, the probability of successful implementation of each individual project implemented by the organization, and all projects of the organization as a whole, increases significantly. Each project is successfully implemented and concrete results are achieved in accordance with the adopted schedule and within the established budget. 


When implementing a separate project, the ability of the organization to conduct successful activities and its overall value objectively increase.

Among the main reasons for the successful application of the principles of the new approach to project management are the following:

  • the organization selects for execution only those projects that best correspond to the development strategy of the organization;
  • all commitments are made only for feasible purposes: technical, budgetary and calendar;
  • responsibility for the management of project portfolios, programs and projects is carefully distributed and strictly implemented;
  • each project is planned, executed and controlled (managed) so that all obligations under it are fulfilled;
  • project management teams should work collaboratively and in accordance with commitments to project goals, plans and schedules.


As for the costs of project management, their value will vary depending on the type, size and number of projects, as well as on the level of development of the project management system in a given organization. 

After analyzing the activities of 20 companies, reports that "80% of companies said that they spend less than 10% of the total project cost on work and services in the field of project management." This study listed a range of project management costs that ranged from 0.13 to 15% of the project cost. 


The largest item of expenditure was salaries or other types of compensation paid to staff. The costs of licensing project management and related software, consultancy and project management training were also significant costs. 


However, no amount of cost and profit level can show the scale of the benefits and benefits that organizations derive from new approaches to project management. These benefits do not have a direct impact on the ROI1 level, but they can be objectively assessed and measured. 

Currently, the managing managers of many companies have learned to effectively use in their practice various ways to determine the value of certain management methods and the overall value of the organization's management system. One of them is the Balanced Score Card Approach. 

Multi factorial studies assessing the impact of project management methods in the organization on the level of its added value show that new project management methods significantly increase the business and organizational potential of the enterprise. 


This conclusion was recently reached by the research group of one of the leading consulting companies in the field of project management RM Solutions, which has more than a hundred senior managers with extensive practical experience in the field of project management. 


According to this group, more than 94% of respondents said that "the application of project management techniques adds value to their organizations. 


This is manifested in a significant improvement in financial performance, increased customer satisfaction, organizational capacity and staff training, as well as improved project/process management."


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