Jamal’s Musings - When Do Companies Start Needing Project Management?

I once had a conversation with a CEO of relatively recent start up. At the moment our conversation took place the company existed for about six or seven years. The CEO mentioned how successful his organization was and how they were discussing plans about expanding their product portfolio into new fields including taking on very large and complex government-sponsored projects.

When I asked him whether he was planning to beef up the project management skills of his employees he looked at me inquisitively and quipped,

“You really think we need to do that? We have accumulated a pool of very talented technical people and I am fairly confident they can take on any challenge that comes along”.

This is by far not the first time I hear a variation of this statement. Many executives continue to believe that the gift of their employees to successfully tackle smaller projects will automatically transfer into the ability to take on larger strategic endeavors.

Every company that manages to survive the start up stage eventually reaches the point when sound project management and portfolio management become strategic assets for the organization. There is practically no way to pinpoint this spot; personal experience tells me that the company usually enters the “danger zone” when it reaches one hundred employees or its revenues exceed $10 million (depending on the country).

Why does it happen? Let us look at the situation from a purely economic perspective. One of the first basic assumptions of every economic model is that people are greedy. Here is a simple example: if I offer you to choose between two piles of money and one of them has one thousand dollars and another one – five thousand, which one would you choose?

Executives and especially the company owners are no different from normal human beings from this point of view. Thus, when a CEO whose company has been involved with projects measuring in tens of thousands of dollars, gets an opportunity to obtain a million-dollar project contract, he usually does not hesitate about whether his company is ready to take on that challenge. As a matter of fact, such events are usually a cause for great celebrations at the organizations worldwide.

What the employees unfortunately don’t realize is that by taking on that million-dollar project they have entered, what I call the “big boys game”. Let me explain this point. The organization that awarded a big project is probably a large corporation with established processes and very specific expectations (they wouldn’t be a large corporation if they did not have those processes in the first place). They expect timely delivery, adherence to the approved budget and tight monitoring and control of all project processes.

Unfortunately the recipient of the contract is frequently unprepared to run the project in a proper fashion. “We will roll up our sleeves and work harder” approach does not work anymore. Requirements are missed, proper project plans are not created and, as a result, the delivery either fails or experiences very serious issues.

The comparison I like to use in those situations is as follows: imagine that the soccer team consisting of your office buddies suddenly made it to the World Cup. What chances would you have with your ad-hoc strategy “just pass the ball to the most talented guy and hope he scores” against the likes of Brazil, Spain or Italy?

What happens at the end of the day in these situations? The big customers are disappointed, other major players probably also hear about the troubled project and are, to say the least, hesitant to award the company the next big contract.

As a result the organizations are never able to overcome the 10-million dollar revenue hurdle and transform themselves into 100-million dollar businesses. They either go bankrupt right away or continue hovering at the 10-million dollars per year level for some time.

 

About the Author

Jamal Moustafaev, MBA, PMP – president and founder of Thinktank Consulting is an internationally acclaimed expert and speaker in the areas of project/portfolio management, scope definition, process improvement and corporate training. Jamal Moustafaev has done work for private-sector companies and government organizations in Canada, US, Asia, Europe and Middle East.  Read Jamal’s Blog @ www.thinktankconsulting.ca

Jamal is an author of two very popular books: Delivering Exceptional Project Results: A Practical Guide to Project Selection, Scoping, Estimation and Management and Project Scope Management: A Practical Guide to Requirements for Engineering, Product, Construction, IT and Enterprise Projects.