Monday 7 February 2022

Project approach in modern business

We will concentrate on only one topic: "Project approach in modern business", since the whole topic of project organization management is extremely extensive so that it can be covered in one not too voluminous article. Such a formulation makes it possible to give the discussions a practical focus and at the same time stimulates a conceptual approach to problems whose solution significantly affects the development of project activities.

Features of project management

The term "project management" refers to a relatively small range of subjects of a technological nature. However, such an interpretation significantly narrows the problem and does not allow to solve important practical issues.

"Project business" is used as a generic term to refer to business activities based on a project-oriented approach. This includes system integration, film and video shooting, software development, insurance activities, organization of exhibitions, etc.

The electronization of business and commerce requires a new look at the problem of project management. In short, the point is that it is time to move from project management to supporting project activities as the most important component of the business.

"Projectivization" of business. In modern business, there are a number of global trends that allow us to talk about its "projectivization", i.e. an increase in the proportion and importance of activities related to the implementation of projects. The most important among them are:

  • transition from regulation and concentration to coordination and distribution;
  • shortening the life cycle of products and services, especially development and launch times
  • personalization of supply and demand, products and services.
  • In general, we can talk about a change in the paradigm (basic model) of business: it begins to be considered as a set of interrelated projects. Such an approach allows us to adequately reflect another feature of modern business, when the main strategic competitive advantage is flexible behavior in a volatile external environment. In such conditions, a departure from rigid organizational structures and management technologies is inevitable.

These trends are especially pronounced in the business related to the Internet. Moreover, we can say that this area will serve as the main consumer of new information systems for project management.

The main conclusion is that in the near future we should expect a change in the approach to building information systems for the project business, taking into account its features, based on modern system architecture, well scalable and affordable.

Features of the project business. Now it is customary to talk about the crisis of traditional ERP systems. However, it would be more correct to state the crisis of the general models of organization and management of business, for the maintenance of which such systems were created. With regard to the project business, the problem becomes especially acute due to some of its features:

  • the intellectually intensive nature of the subject area of most projects;
  • a small share in projects of economic activities related to tangible assets;
  • strong dependence of the success of projects on external conditions, primarily the behavior of the customer;
  • increased risks, including the risk of violation of deadlines and budget, termination or suspension of the project, unsuccessful implementation;
  • increased quality requirements that are constructive, i.e. objectively verifiable;
  • a high degree of individualization "for the client" and the importance of organizing "close" work with him;
  • high probability of the emergence of new, previously unperformed work, for which the methodology, technology and management system are created "on the fly";
  • high requirements for the qualification of managers and performers, their high cost;
  • the critical importance of a corporate office system that supports communications and knowledge base;
  • the special nature of budgeting, planning, control and accounting;
  • the high uneven flow of orders, which hampers human resources management;
  • geographical remoteness of the client;
  • the presence of several performers and their geographical distribution.
  • It should be noted the paramount importance for the project business of the problem of human resources (both managers and specialists) in all its aspects.

Project management. 


The project management system should meet the following basic requirements:

orientation to support decision-making, primarily related to the use of resources and the development of new products and services;
an effective human resources management system;
a flexible planning and accounting system that allows regular restructuring of projects in accordance with changes in conditions and achieved results;
developed office system (communications, knowledge bases, back office);
effective support for distributed activities;
monitoring and maintaining relationships with customers and partners.
Project-based approach to doing business
Consider the conceptual practical approaches to the project way of doing business.

The challenge of time. The "projectivization" of modern business raises the question of modernizing traditional project management.


Classical strategic planning and classical project management have much in common in the methodology, which is "inventory" in nature and consists in a detailed description of activities and works for many years to come. 


Now classical strategic planning is experiencing a serious crisis. The main reason for this is insufficient consideration of the fundamental factor - the variability of the external environment. Strategic plans have always been drawn up in the assumption of the stationary nature of the external environment with some regular tendency. The only question was about the accuracy of predicting deviations. However, now the task of creating adaptive mechanisms at the strategic level, i.e. mechanisms for the early identification of opportunities/ threats and their use / neutralization, is coming to the fore. Accordingly, the approach to investment analysis is changing - the gradual abandonment of smooth models in favor of models with variable structure.

The introduction of integrated ERP systems is a good example of a project that does not quite fit into the traditional framework of the design approach. Indeed, before the start of work, it is often not known what needs to be done in the field of rationalization of business processes and organizational changes. Therefore, detailed planning is carried out only for the next stage according to the results of the previous one, taking into account the changing realities of the external and internal environment. Thus, we can talk about projects that are largely adaptive in their essence.

E-business development projects are extreme examples of projects implemented in conditions of maximum uncertainty of the external environment. It is noteworthy that even the trading technologies offered cannot be accurately assessed in terms of their attractiveness to potential customers. In other words, projects for the creation of e-business systems are totally adaptive, when decisions about the structure and composition of the project have to be reviewed several times a year. To all this is added the factor of racing in the face of fierce competition and fear of being late.

Project as a tool for creating products. This is the most common type of project. An order creates some alienable product, which the customer uses at his discretion. Examples of such products are programs, design solutions, buildings, etc. Traditionally, special attention has been paid to design technology, and therefore to systems such as CASE, CAD, etc.


A software firm operating in US has increased its staff from 50 to 250 people over the past year due to the growing number of custom developments. To increase productivity, the firm acquired Rational's integrated CASE technology. According to calculations, this should have reduced the time for creating software by half. In fact, the order fulfillment cycle has not changed significantly. Moreover, it was necessary to hire and train additional employees " managers and business analysts, as well as to attract third-party organizations. At the same time, maintenance costs increased significantly, and due to the geographical distribution of the firm's offices, development teams and customers, communication problems arose.

AvtoVAZ has been investing millions of dollars in the automation of design and technological work for decades.

A major USn manufacturer of rocket technology believes that if it was given $ 50 million, it would be possible to use it. for the acquisition of an integrated CAD/CAM system of the type that Boeing corporation has, then it would quickly become a world leader in its segment.
The project as a market product. The project can be considered as an independent market product, which is an organizational and technological complex. In fact, we are talking about the fact that the entire range of issues related to the implementation of the project is being developed for the customer.


A telecommunications company in Boston (USA) received an order to deploy a regional integrated data transmission system worth about $ 300 million. This company turned to a specialized consulting firm to develop an organizational structure, technology and procedures for managing work, resources and quality, accounting, scheduling, etc. Moreover, the consulting firm displayed its developments in some automated system for supporting project activities, and after the launch of the project, it took up its support.
A major USn ministry has decided to modernize its information infrastructure. A technical architecture was developed, the stages of the project were carefully thought out, money was allocated, and performers were selected. But pretty soon it turned out that the program was uncontrollable. It turned out that it is almost impossible to carry out a coordinated change in work plans and technical solutions, as well as to change the composition of the performers within a reasonable time. The volume of project documentation coming to the parent organization grew exponentially. The worst thing, however, was that no one could accurately assess the amount of work done and the degree of approximation to the desired result. At the same time, formal reports on the work done were received regularly.
The project as a tool for doing business. If the project is understood as a form of doing business in trade and services, then the transaction is formalized as a project to which the appropriate management and accounting methods are applicable.


A rapidly growing multinational company conducts the following activities:
development and implementation of programs for the promotion of existing and new products such as brand names;
packing and supply of 300 thousand items of goods from more than 3500 manufacturers;
development and manufacture of goods according to custom specifications.
Customers have very strict requirements for meeting the planned deadlines, which is why the company must be able to predict and clearly monitor the processes of manufacturing and delivery of goods in the specified control periods. At the same time, a significant problem is value management, i.e. assessing the economic efficiency of each individual order and controlling the costs of each transaction, including the cost of procurement, manufacturing, freight and transportation.

During the selection of a new ERP system, the management realized that the main activities of the company can be most adequately represented as a set of parallel, interrelated projects. This choice was significantly influenced by the presence in the system of a developed project management module, which, in combination with the modules of finance, production management and logistics, made it possible to track the cost and progress of each order.

The largest insurance company uses a modern project management system for their registration in the form of both individual transactions (including transactions with individuals) and entire insurance programs. As a result, the possibility of integrated business management is achieved, including planning and control of specific activities, estimation of costs and revenues for programs, products, transactions, business units, target segments and agents.
A large USn distribution company supplies the market with world-class clothing and footwear. The collection is updated every season. The order for the manufacture and supply of goods is prepared and placed for one year in advance. The firm has an extensive network of regional partners involved in the formation of the order. The company pays great attention to marketing activities. In the process of implementing the new ERP system, the company set the task of identifying the project structure of its activities using such decomposition features as the product group, seasonality and partners. For example, for each product group, projects for the preparation and execution of consolidated orders are allocated, followed by a breakdown by season and partner.
Integration of methodologies and standardization. Currently, there are many specialized methodologies developed by the efforts of leading consulting and computer firms. However, the "projectivization" and "electronization" of business acutely pose the task of integrating these methodologies.


The rapid development of e-business forces us to take a fresh look at methodological issues due to the following circumstances:
a change in the substance of the tasks under consideration;
the need to integrate specific methodologies in view of the complex nature of the problems;
the need to create a "new competency" by merging heterogeneous competencies embodied in "computer" and "consulting" methodologies.
There are methodologies that naturally gravitate towards each other. For example, the CALS methodology is the basis for building a product life cycle model. At the same time, it is a platform for building a total quality system TQM. These methodologies are closely adjacent to workflow models, formal tools for modeling business processes, methods for building corporate data warehouses. Within the framework of these methodologies, various kinds of standards are being developed. And all this is directly related to project activities.

The project as a conceptual unit of knowledge. Knowledge management is of fundamental importance for project-oriented activities, since the main capital of such organizations "is corporate experience in solving problems of a certain class. The project seems to be a convenient unit of knowledge organization, in which in a coherent form there are essential components of knowledge: the formulation of the task, the result, the ways to achieve.


The vast majority of USn machine-building enterprises do not have any coherent and detailed description of the process of selecting, creating and putting into production a new product. This is a common disease of both civilian and military industries.
Over the past ten years, AvtoVAZ has lost hundreds of leading specialists - middle managers. In fact, we can talk about the loss of the potential for creating new models of cars. A similar situation has developed at other large engineering enterprises, where in fact there are weakly connected "tops" and "roots": the tops dry out, and the roots rot, and all this leads to a general collapse.
In any large organization, there are several different types of projects. For example, in a software company, custom development projects, adaptation of the existing support program, etc. At any machine-building enterprise, projects for the development and modernization of products, the development of new equipment, the reconstruction of buildings and infrastructure, etc. are necessarily carried out.
Programmatic approach. Formally, the program is defined as a set of interrelated projects. However, for practical application, this definition is not very constructive.


In the late 60s, the US government launched a program to create ultra-large integrated circuits (VLSI), which gave a powerful acceleration to the development of microelectronics. The successful experience of its implementation has been used in other US federal programs, the so-called strategic initiatives in various industries. In US, the problem of restructuring in the broad sense of the word: public administration, industries, enterprises is extremely acute.
The project as a quality assurance tool. Within the framework of the project approach, quality can be defined as obtaining the desired result with given constraints on resources and deadlines.


There are numerous examples of the so-called "implementation" of ERP systems, when the system was installed, but is not used or does not give the desired result. In the United States, there were cases of lawsuits against consulting companies that implemented ERP systems in recipient firms, after which the latter went bankrupt.

For each specific project, it is relatively easy to develop a set of quality assurance measures. The use of the entire range of measures and procedures for quality management usually leads to an increase in the cost of the project by 15-30%. At the same time, the rejection of quality management in general can lead to the failure of the project.

The company "1C" proclaimed ensuring the quality of implementation projects a strategic task of working with partners, allowing to maintain a firm competitive position.

Project organization and administrative structure. No matter how much we talk about divisional, matrix and other schemes for building an organizational structure, the functional structure with all its grimaces towards project-oriented management of companies still dominates in US.


  • The US consulting firm has adopted a business development program related to the implementation of a full-featured integrated ERP system. It is planned to launch two large projects within a year (the implementation period is up to one and a half years), as well as several small and medium-sized projects (with a implementation period of 3-6 months). When implementing the program, it is planned to maintain the existing functional structure focused on solving specific problems in the field of management consulting, software development, and system integration. Each specific implementation project is expected to be managed and implemented through the heads of functional departments. Because of this, the team involved in any project consists of a project manager " CEO and executors " heads of functional units. The result is a very expensive pleasure: the CEO ceases to deal with the strategy and the company as a whole, and the heads of departments play the role of simple switches of tasks, which also introduce distortions.
  • The USn diversified company has created a successfully functioning system of internal self-financing and remuneration of labor based on the real economic results of the activities of business units. In accordance with current trends, the company is considering the possibility of introducing a project approach. Managers see the main problem in changing the financial and accounting structure and the principles of management accounting: business units should be replaced by projects with which plans, budgets and results will be associated in the new structure.
  • A new level of relations between the participants. Traditionally, projects are considered in the context of the customer-contractor relationship. In modern conditions, many (dozens) partner organizations are involved in their implementation.


  • The publishing house, which has large information resources, is considering the possibility of creating a trading platform for a group of vertical markets. Already at the stage of developing a business plan, it suddenly became clear that it was necessary to attract a large number of participants to the work (see table). At the same time, each company wants to participate in the project not only as an executor (subcontractor), but also as an investor, counting on the investment attractiveness of the project. Thus, the project identifies a group of partners who claim a certain participation in the management of the project. This situation reflects the general trend towards the establishment of long-term partnerships related to the implementation of projects.
  • Analysis of the experience of successful development of companies-organizers of electronic trading platforms shows that one of the main factors of success is the careful selection of partners who are able to work without conflicts of interest. At the same time, there is a tendency to absorb partners as the business develops.
  • Approximate composition of participants in the creation of a trading platform on the Internet

Project Manager. The illusion is created that with the introduction of new business management technologies, the severity of the personnel problem decreases. This fully applies to project activities, when plans, methodologies, procedures cease to be seen by specific people - managers and executors.


In many Western firms, there is a rule: a new project is considered provided that there is a real opportunity to find a suitable project manager. Often the conditions are even tougher: the project is considered only if there is a suitable person who can act as its leader. The natural explanation is this: every case should have a "motor".

In most USn companies, the project manager is a nominal figure, appointed according to the principle: "It is impossible without the project manager." At the same time, the project manager does not have freedom of activity, since he must coordinate all his intentions with the general director of the company (the real manager of the budget) and the heads of functional departments (real managers of human resources). Since budgeting as a real management tool in the company often does not work, the project budget is drawn up quite formally. In such conditions, it is simply not necessary to talk about the delegation of authority and responsibility to the project manager.

Project-oriented CIS. The term "project management" is traditionally associated with network diagrams and desktop applications such as MS Project. With the help of such tools, you can describe some individual aspects. However, in modern conditions, it is relevant to develop integrated models of project activities and methods for its description.

Taking into account the trend of "projectivization" of business, it can be assumed that support for project activities should become a central element of the corporate information system. This means moving away from the "ERP centrism" that has prevailed until now.


In integrated ERP systems, such as Axapta, there is a more or less developed project management module, usually focused on solving project accounting and control tasks. As a rule, at the export-import level, the ability to use popular desktop project management systems is supported.

Powerful systems for supporting project activities, implemented in modern web architecture, for example, Maconomy, appear on the market. They contain knowledge management capabilities, detailed role study, many other useful functions that are absent in the project modules of ERP systems.
Thus, the electronization of business and commerce requires a new look at the problem of project management. We are talking about the need to move from project management to supporting project activities as the most important component of the business.

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