Friday 15 April 2022

Round trip : Projects and Processes


Process and project approaches to the management of an organization impose different, often opposite requirements on various aspects of the company's management system, such as organizational structure, accounting policy, personnel, system...

Today, two main views on projects in the company are common: they are considered as a form of carrying out the main activity or as an effective form of implementing changes in the company. Accordingly, companies can be divided into project-oriented, implementing their main activities in the form of commercial projects, and non-project-oriented, using projects mainly as a tool for internal development.

However, such a division is rather conditional, since trying to increase the efficiency of certain operations, the company spontaneously comes to replace stationary processes with projects (unfortunately, often in surrogate forms). Conversely, in an attempt to improve the efficiency of project implementation, the company begins to understand the project as a typical, regularly repeated process that can be standardized despite the unique goals and conditions of implementation. Thus, we can note the following, in our opinion, inevitable trends in the activities of a variety of companies:

Regarding any process, at some point it may be necessary to consider it as a project. Examples: pilot runs of new processes or modified after reengineering, the danger of failure to complete operations at a high cost of losses, servicing requests of VIP clients, etc.
Any company implementing projects sooner or later has the need to present the project as a unified process, which is associated with the need to standardize approaches to the implementation of diverse and multi-scale projects and increase their efficiency.
However, the process and project approaches impose different, often opposite requirements on various aspects of the company's management system, such as organizational structure, accounting policy, personnel, motivation system, etc., which creates serious barriers to effective project management.

The harmonious combination of the process and project approaches requires a certain level of maturity from the company, since such unity is possible only on the basis of a whole system of formalized standards and internal corporate relations. This, in turn, determines the immediate costs of reorganizing the company's management system, and the subsequent costs of "owning" two parallel (process and project) control circuits.

To go or not to go for such expenses? This issue is not related to the scope of the company's activities and its size. This is a matter of the company's long-term development strategy, the price of which is business efficiency and the possibility of a successful existence in the market.

Processes as projects
First of all, we will make sure that the very formulation of the question of the implementation of processes in the project form is not without meaning. Consider the classification of business processes, built on two grounds: the possibility of changing the company's product line and customizing products to the requirements of the consumer (see Fig. 1). In accordance with this classification, we will analyze four main groups of processes and illustrate the possibilities of applying projects in their execution.

Segment 1. Limited ability to change product lines and customize products

In this segment, we place companies that produce a product focused on satisfying an unchanging, repetitive need. Processes are built in accordance with the production technology and are unique for each business. The boundaries of the processes are mainly determined by the provisions on subdivisions. Fig. 2 illustrates such processes on the example of a taxi fleet.

As a rule, within the framework of these processes, routine repetitive tasks are solved. However, we can safely assume that the implementation of complex repairs or maintenance of an important client may well require a change in established procedures, and then there will be a need to organize a project.

The criterion for choosing a form (process or project) in these cases should be economic feasibility. The calculation should take into account both the increasing costs when applying the project approach, and the possible loss of profit in case of disruption of work or loss of the client.

Segment 2. Limited product line changes and significant product customization options

This segment, first of all, includes companies that produce a product, the consumption of which has a stretched in time, renewable character. These companies strive to meet the requirements of specific customers as fully as possible, so business processes are focused on maintaining a relationship with the client and are end-to-end. The structure of processes practically does not depend on the type of business, and their boundaries are determined by the stages of relationships with customers. In Fig. 3, such processes are illustrated using the example of a telecom operator.

Here, the expediency of applying the project approach, as well as in the previous case, is associated with the technical complexity of the task being solved and the importance of the client. In many cases, especially when working with corporate clients, both the preparation of the contract and its implementation, and the subsequent work with requests and claims can be carried out much more effectively in the project form (see more about this in [1]).

Segment 3. Significant product line changes and limited product customization options

This segment includes companies that quickly respond to changes in demand and adapt their product line to the real requirements of the market as a whole. Business processes correspond to the product life cycle, so the structure of processes does not depend on the type of business.

Figure 4 illustrates these processes using the example of an air carrier whose products are the transportation of passengers on certain routes.

The use of the project approach may be appropriate for all stages of the life cycle associated with the development and implementation of the product (with the exception of sales and maintenance).

Segment 4. Significant opportunities to change the product line and customize products
This segment includes companies focused on creating a unique product for each client, while they use the existing product line, as well as complement and develop it. Business processes correspond to the life cycle of the object being created (information system, structure, etc.). In Fig. 5, such processes are illustrated by the example of a construction site.

As a rule, these companies are project-oriented, that is, a significant part of their activities is project-oriented, and all stages of the life cycle of the facility, with the exception of operation, are combined into one or more projects.

All these groups of processes seem to the authors to be quite universal. Indeed, considering the structure of processes (and the possibilities of applying the project approach), the taxi fleet can be replaced by a hotel, a telecom operator by a pension fund, an air carrier by a developer of standard software.

Moreover, in the activities of each company, to one degree or another, there are several, or even all four of the considered groups of processes. Let's explain this idea on the example of multidisciplinary IT companies. The processes of the first group are characteristic of all IT services in the part of their responsibilities that relates to the maintenance and support of the functioning of information systems. The processes of the second are characteristic of departments that provide outsourcing services in the field of IT. Units specializing in the production of standard software use product cycle processes. Finally, system integrators typically focus their business processes on the information systems lifecycle.

Projects as processes
The presentation of the project in the form of a set of processes is well known to specialists in the field of project management according to the international standard PMBOK Guide PMI (see [2]). However, the framework nature of this standard does not allow to build project management processes at the company level with the necessary degree of detail. It is even more difficult to fit these processes into the context of internal corporate relations, taking into account the peculiarities of the organizational structure, the principles of coordination and subordination, the rules of office work, etc.

The only way to present the project as a unified process is through the creation of a corporate project management standard containing elements such as regulations and regulations (including the principles of accounting for labor costs and motivation), project execution procedures, role instructions of project personnel, templates of management documents.

Detailed information on the principles of creating a corporate project management standard can be found in [3]. Here we will confine ourselves only to a brief description of the processes implemented during the implementation of projects and presented in the standard form of procedures.

From a methodological point of view, the total set of possible project management processes can be represented as a three-dimensional space depicted in Fig. 6. It shows the stages of the life cycle of the information system implementation project.

Each point of this "space" is an elementary control process. For example, "risk planning at the stage of system development" or "quality control of system design". For the convenience of description and execution, project management processes should be grouped according to some principles and presented in the form of formalized procedures. Various principles of grouping are possible in accordance with the axes of the "space" of project management processes: the "abscissa principle" - according to the stages of the project life cycle, the "ordinate principle" - according to the management functions, the "application principle" - according to the management phases.

The essence of the principles of formation of project management procedures is as follows (on the example of the "ordinate principle"). All functions described within the procedure are strictly related to one control function (for example, deviation management). The interaction of this function with others (for example, with the project cost management function) is described by reference to the relevant procedures, which can be built on the "ordinate principle" (in particular, the cost management procedure), "applications" or "abscissas". The content of the procedure should cover management issues within this function (for example, deviation management) at all stages of the project life cycle and in the implementation of all management phases.

Combined approaches are also possible. Thus, the grouping of processes by management phases can be used as the basic principle, and for a number of processes that are of fundamental importance, for example, for the formation of a project management culture, grouping by management functions can be used.

Uniform rules of support and use should apply to project management procedures and procedures that describe the execution of processes that are not related to projects. Thus, if the company has a quality management system, project management procedures should be formalized in accordance with its requirements, the mechanisms for their revision are strictly regulated, and the correctness of execution should be subject to regular audit.

Harmonization of process and project approaches
Among the most serious obstacles to the introduction of project management should be called the redistribution of spheres of influence in the company, both at the middle and highest levels of management. Previously, everything was simple: a functional manager was responsible for solving specific tasks, built appropriate processes and entrusted their implementation to subordinates. Now it turns out that the same task can, in principle, be solved in a different way and, possibly, more efficiently. But at the same time, the "ownership" of part of the process or individual implementations of it should be transferred to other people – from functional managers to project managers. In order for such "transfer of control" not to lead to noticeable political upheavals in the company, formal rules for the coexistence of process and project activities should be defined.

It is also no secret that for the project manager there is a great temptation to organize management in the way that is convenient for him - the tasks are unique. But if every manager acts according to this principle, chaos will ensue in the organization, especially if it is necessary for the parallel existence of two management cultures (process and project) in the company. In this case, as noted above, it is necessary to create a corporate standard that defines a set of management procedures and uniform rules for their support and use, regardless of whether they regulate process or project activities.

Based on these considerations, we see three main stages that need to be implemented in order to ensure a harmonious combination of process and project activities in the company.

Step 1. Structure the company's operations

The content of the stage is a formal description of the organizational and functional structure of business processes (implemented functions, executors). Perhaps, in the course of formalization, a certain restructuring of the process will be carried out - redundant or duplicate functions will be eliminated, missing ones will be added, responsibility will be redistributed. This is particularly important because the result of the phase will be a basic version of the process, which will subsequently be compared with the options that arise in the direction of more radical changes.

At this stage, a single centre of responsibility for the process, in other words, its owner, should also be defined. It is this person (or group of persons) responsible for the course and outcome of the process as a whole, who will continue to decide in what form to carry out specific implementations of this process.

Step 2. Create mechanisms for the implementation of processes in the project form

The content of this stage is:

Building alternative options for implementing processes

For processes for which existing practice is unsatisfactory, optimization options are developed based on the project approach. Optimization criteria can be formal process constraints, such as execution time, resources used, result quality, and other metrics that determine the alignment of processes with the company's business goals. Some fundamental points related to the implementation of this stage are described in more detail in [4].

Adaptation of the company's management system to the implementation of projects

The most significant changes are related to the area of the organizational structure of the company. We are talking about the creation of permanent (project management office) and temporary (project teams) organizational units that are involved or specially created to work on projects. Also among the possible consequences due to a change in the organizational structure are a change in the company's budgeting system, the principles of recruitment and motivation of personnel, etc.

Formation of regulations for the interaction of process owners with project managers

The decision to apply the project approach is made, as we mentioned above, by the owner of the process. However, making a decision and involving a dedicated manager for the implementation of the project does not at all remove the responsibility for the process from its owner. It is he who determines the methodology and technology for solving the problem, as well as allocates the necessary specialists and, possibly, controls their work.

The project manager still has operational management issues. However, the amount of authority delegated to it can vary very widely and depends both on the specifics of the tasks being solved and on the traditions of corporate culture.

In principle, a lot can be regulated in the relationship between these two key figures - the division of responsibility, the rules for "transferring control" to project teams, the allocation of resources, and the resolution of controversial issues. But no less (if not more) influence on the successful combination of process and project activities is exerted by the spirit of cooperation, which is very smallly regulated.

Step 3. Establish mechanisms for unified project execution

It is at this stage that a full-fledged equal sign between processes and projects should be put. The latter are deprived of the aura of exclusivity, and their implementation becomes an ordinary, routine matter.

Processes that arise during the execution of projects are structured and described in the form of procedures. These processes have their own owner, who monitors their effectiveness, the correctness of execution, and is responsible for their development. The owner of project management processes is usually the Project Management Office or a similar service of the company (see more about this in [3], [5]). If such a specialized structure is not created, the functions of maintaining the corporate standard of project management can be assigned to the Quality Service.

For many of the production challenges faced by modern companies, it is impossible to say in advance which form of solution will be more effective – process or project. If the need to make a choice becomes a rule, it is necessary, firstly, to formalize the procedures for making such decisions and, secondly, to ensure the very possibility of the simultaneous existence of both forms of management in the company.

The first is achieved through the development of a system of clear criteria to determine in each case which form is more effective, as well as through the correct distribution of rights and responsibilities between process owners and project managers, who are transferred control of individual instances of these processes.

The second is achieved, first of all, through the construction of flexible organizational structures of the matrix type, which in turn immediately imposes special requirements on budgeting systems, accounting and many other management circuits in the company.

A special role in harmonizing the process and project activities of the company can be played by the development of a corporate project management standard using quality management methods and standards. It is from the perspective of the latter that it becomes most obvious that processes and projects are just two sides of the same coin.

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