Harold Kerzner: Project Managers Must Understand Business
Project managers are in for some big changes. Coming in on schedule and within budget is all well and good--but it's not enough.
That's been the running mantra for a while now, but it seems to be gaining even more traction as Harold Kerzner, PhD, explained in the first-ever closing session at a PMI global congress in North America.
"Time and cost used to drive all decisions," said Dr. Kerzner, senior executive director, project management at the International Institute for Learning Inc. "Now we're saying, 'Wait a minute, are we providing value?'"
Without that, the project will be axed.
"If management doesn't see how a project will deliver a value, that project will be canceled even if it's meeting time and budget constraints," he said.
Not all constraints have equal value, Dr. Kerzner said.
That's quite a mind shift for project managers--and it's going to take a whole new skill set.
Indeed, Dr. Kerzner boldly predicted earned value management will be "obsolete very shortly," upstaged by value measurement methodologies that consider intangibles such as goodwill or reputation.
And while a mastery of technical knowledge use to suffice, that's now considered "old school."
"Project managers must understand business," he told the crowd.
They will also need an understanding of politics, culture/religion, stakeholders and people. And Dr. Kerzner predicted a new wave of certifications in complex projects, virtual teams, cultural differences and morality and ethics.
Project managers who go in armed with those skills will find a receptive audience in the executive crowd.
"The biggest change in the last several years has been in senior management support of project management," he said. "Senior management no longer views project management as a career path. It is now viewed as a strategic competence necessary for survival of the company."
Do you agree with Dr. Kerzner? Are you seeing increased demand for business understanding--or should project managers stick to what they do best?
I realize that in my classes the students are being taught that cost effectiveness and time is what will make it happen on a projects success. I have never agreed with this concept entirely. Mainly because I am a people person and I believe that you have to value what, who, where and all other sorts of entity in which you will be working with. If project managers are not taught these skills then they are truly limiting their selves and resources.
We should understand that we are managing regardless of what is given to us to manage. In management we have to be taught how to manage effectively. In business management course a person will learn traint, have insight and other addition concepts that will attribute to the success of business relating to people, politics and the economy. Project management should not be undermined it its clear understanding of what "business" is for their career.
At the same time I agree with Dr. Kerzner that the "weight" of EVM will be diminished by intangibles. The problem with measuring intangibles is complexity. The convergence of culture, computers and creativity will increase our ability to approximate "Intangible Value Management." I think that EVM can be useful to measure "Intangible Value Management."
For example in October 2009 on the social network Twitter the meme #beatcancer was the fastest spreading social idea according to Guinness. Donors gave 1 cent for every mention of #beatcancer in 24 hours on the social network Twitter. They raised $70,000 in 24 hours.
So Time and Cost provided incentive and validation of an Intangible Concept "support to Cure Cancer." EVM won't become obsolete, we just need to use it as the great tool that it is.
What I think Dr. Kerzner is describing is a shift in company goals, which should be reflected through portfolio and program management, but not project management. His question of whether we are providing value: That is already answered by the project charter. Once the goals and objectives are established, one doesn't need to ask, within the project management arena, whether we are providing value. If the market, corporate or customer's needs change, possibly putting the value of the project into question, that is not a project management issue, but one of portfolio or program management.
I think a project manager needs to understand business, politics, economics, ecology, etc., only in so far as the project manager is involved in establishing or managing the company's programs & portfolio or helps in establishing company goals. Within the boundaries of a project, these kinds of skills (except for politics) are of limited benefit or need UNLESS those skills are required to meet the project goals because they are part of the project charter.
The project charter has already made the business decisions. Recurring review of project completion should be done within the boundaries of the project charter and company goals.
Now, don't get me wrong, I think any of that knowledge is useful for a project manager, as well as the rest of the project team. I just suggest that we keep the issue in the proper perspective.
P. S. Perhaps what we have here is a pointer for career development for project managers as they progress from managing projects to managing programs and then rising to corporate strategic management, lol.
A focus on delivering business value at the expense of the "traditional" metrics of time and cost could be a mandate for poor project controls. Couldn't it be said that the discipline of project controlsâ€”such as earned value managementâ€”are exactly the things that have given project management the credibility to talk at executive level? To abandon these, however noble the ambition, may be to the overall detriment of project management.
A thought-provoking article. Thank you!
|Peter M. Lang|
Peter M. Lang, M.S.S.M.,
Apex /Baldrige Examiner,
Alaska PMI / ASQ Officer
Perhaps the project manager does not see the longer term view, perhaps they do not see the strategy of the executive/sponsor or maybe the sponsor doesn't know what they are doing. Whatever the reasons, as long as the sponsor is putting up the money, the project manager should be delivering to the triple constraints.
With these set of common understandings, business-IT strategic alignment becomes more and more important so that ultimately the value is delivered for each investment. - Maureen Gan, PMP
It will indicate whether a project is financially, strategically and environmentally feasible before you as the project manager decide to take on the project or not. It is for that reason, why a project managers is supposed to be a business person as well. I don't think a project manager is supposed to take any project and not worry about whether its going to fail or add value to the organisation.
|Sekhar Ryali, MBA, PMP|
Project managers are in the business of creating value for the customer (client). If customers are changing their focus to intangible value-add measures in addition to the traditional EVM approach, this calls for adaptation to meet the customer's needs.
|Dr.Ahmad Al-Ani, MD, PMP, CPHIMS|
Many of project managers, including myself, have this passion for PM because it's about adding value to what we do, to the team, to the organization, and even on very personal levels.It's not always about time and cost, and you can see great projects around the world who had failed in that limited sense but proved to be very valuable projects that exceeded their main objectives.
|Raiana Golden PMP|
We are in a business world where, due to all manner of things like economics, technology, etc., an organization's priorities and strategies are shifting and changing much more quickly. If a project is not going to contribute positively to the company's strategic goals - why bother? In addition - a project value may have been clear at the project inception but is it still clear when a new market opens or a merger has taken place? Can the project morph to continue to add value in the face of business change or is it better to kill/table it in favor of another project.
These and a host of other related questions are things that project managers should be keeping on the forefront. In addition, we should be evaluated on our ability to proactively track, measure, report and offer recommendations with regards to a project's continued value and quality as well as the old standards of bringing a project in on time - on budget.
Raiana Golden, PMP
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